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Serba Dinamik’s 2Q19 profit up on O&M biz

SERBA Dinamik Holdings Bhd’s earnings jumped 27% year-on-year (YoY) on higher operation and maintenance (O&M) activities, with demand for maintenance works expected to persist despite market volatility.

The engineering services provider for the oil and gas and energy industries posted a RM130.44 million net profit for the second quarter ended June 30, 2019 (2Q19).

This was against the RM102.74 million managed in 2Q18 and was largely owing to the 41.8% YoY increase in group revenue to RM1.14 billion from higher O&M activities.

The business segment, which contributed to 83.5% of total group turnover, benefitted from higher maintenance, repair and overhaul works in Malaysia, Indonesia and the Middle East, its exchange filing yesterday stated.

Lower inspection, repair and maintenance works partially offset the increase.

Serba Dinamik’s second-largest revenue contributor, — its engineering, procurement, construction and commissioning (EPCC) business — posted stronger turnover for the quarter, especially from higher contributions from its chlor-alkali plant in Tanzania.

For the first half of the year (1H19), the company’s net profit rose 24.2% YoY to RM242.59 million, while revenue increased 38.6% YoY to RM2.12 billion.

It declared a 2.7 sen dividend for 2Q19, bringing total dividends declared for 1H19 to five sen.

Serba Dinamik foresees demand for maintenance works to continue and is actively bidding to increase its presence in this segment.

“Despite the volatility in the market, the company still believes maintenance works are required, especially on the mid and downstream sector,” it said in filing.

“Thus, the company has been actively engaging and participating in various bidding to capture more market in the maintenance space.”

Serba Dinamik is actively involved in the chlorine and caustic soda industry as the demand in the global market is expected to grow from 74.62 million metric tonnes in 2017 to 89.19 million metric tonnes by 2022 or at a 3.63% compound annual growth rate.

In line with this, the company entered into another EPCC contract, valued at US$250.3 million (RM1.05 billion), with Hazarasp Chlor-Alkali LLC FC for a 90 tonne-per day chlorine processing plant and a 26MW steam turbine power plant.

“The group expects to continue to strengthen (its) position in the Central Asia region, as well as strengthening its capability in EPCC works,” it said.

Serba Dinamik foresees the O&M business segment remaining as its major revenue contributor in light of new contract wins and renewals recognised in 1H19, while the EPPC segment will continue to contribute considerably to the group.

Malaysia remains Serba Dinamik’s largest individual market, contributing to 30% of group revenue in 1H19, and noted higher call out works for the O&M and EPCC segments.

The Middle East region is the company’s largest regional market as it made up 59% of total group revenue for the period. It benefitted from higher activity from Qatar, Bahrain and the United Arab Emirates.

Serba Dinamik group MD and CEO Datuk Dr Mohd Abdul Karim Abdullah (picture), who holds a 23.61% stake in the company, made headlines recently after triggering a mandatory general offer for the remainder interest in Sarawak Consolidated Industries Bhd (SCIB).

He already holds a 42.84% stake in the Sarawak-based precast concrete product manufacturer.

The self-made billionaire was also named executive deputy chairman of Kumpulan Powernet Bhd in June this year by virtue of his 20.04% stake in the company. He is also a director in CSE Global Ltd where he holds a 0.79% stake.

Serba Dinamik closed at a near record high yesterday at RM4.39, down one sen and giving the company a RM6.45 billion market capitalisation.