THAT its future is still mired in uncertainties pertaining to the release of its release special independent review (SIR) report has probably led TA Securities Research to retain its “sell” recommendation on Serba Dinamik Holdings Bhd despite the research house having upgraded its 2021-22 oil price assumption to US$70-US$75/barrel (previously: US$65-US$70/barrel).
However, the global integrated oil & gas (O&G) service provider bucked such expectations this morning when it surpassed the 40 sen psychological barrier this morning – the counter last closed at that mark on Sept 7.
At 11.32am, Serba was up 4.5 sen or 12.33% to 41 sen with 205.73 million shares traded, thus valuing the company at RM1.53 bil.
In its latest assessment, TA Securities Research continued to maintain the target price of Serba Dinamik at 25 sen with a three-star environmental, social and governance (ESG) which is the lowest among the eight O&G companies under its radar.
This is despite the share price Serba Dinamik rebounded on Friday (Oct 8) to close 3.5 sen or 10.61% higher at 36.5 sen with 99.18 million shares traded to value the company at RM1.36 bil.
Also rated “sell” alongside Serba Dinamik is Pantech Group Holdings Bhd with an unchanged target price of 64 sen (from “buy” previously) but by the research house justified its decision given the counter’s recent share price surge, hence “we believe that current valuations reflect its fundamentals”.
More recently, Serba Dinamik has reiterated that it expects the SIR report by its special independent reviewer Ernst & Young Consulting Sdn Bhd (EY) to be ready within 4Q 2021.
Moreover, the company has to unveil its audited FY2020 financial statement for the 18-month period ended June 30, 2021 which has to be released alongside the company’s annual report by Oct 31.
Recall that on Sept 29, Serba Dinamik had announced an unaudited net profit of RM13.8 mil – the lowest in its corporate history – from a revenue of RM1.2 bil for its 6Q FY2021 ended June 30, 2021.
Among its eight O&G stocks, TA Securities Research is most bullish about Petronas Chemicals Group Bhd which target price has been raised to RM10 (from RM8.50 previously) while the company’s rating was elevated to “buy” (from “hold” previously).
“We believe the higher premium is warranted given the current surge in natural gas prices,” justified analyst Kylie Chan Sze Zan in an O&G sector review in which the research house has an “overweight” outlook for the sector.
“Hence, this implies margin expansion for Petronas Chemicals given (i) higher product prices due to cost-push factor; (ii) Petronas Chemical’s gas feedstock is procured at low fixed prices from its parent, Petronas; and (iii) most of Petronas Chemical’s competitors are confronted with cost pressure from higher naphtha feedstock price.”
Additionally, TA Securities Research has also raised MISC Bhd’s target price to RM8 (from RM7.30 previously) on the back of the company’s successful venture into the mega-FPSO (floating production storage and offloading) business (via Mero-3).
At 11.23am, Serba was up 4.5 sen or 12.33% to 41 sen with 160.56 million shares traded, thus valuing the company at RM1.53 bil. – Oct 11, 2021
