The proposed fundraising will be via private placement, which is the second time in less than six-month by the oil and gas outfit.Shares in Serba Dinamik closed 7.33% or 14 sen lower to RM1.77 a piece yesterday. PETALING JAYA: Serba Dinamik Holdings Bhd’s share price falls as much as 8% after announcing a fundraising exercise worth more than half a billion ringgit to finance its order book projects. The proposed fundraising will be via private placement, which is the second time in less than six-month by the oil and gas outfit. Shares in Serba Dinamik closed 7.33% or 14 sen lower to RM1.77 a piece yesterday. Analysts were mainly “neutral” on the second private placement by Serba Dinamik although it would dilute the company’s earnings per share (EPS) moving forward. Kenanga Research said the private placement is a “necessary step” for the group to meet upcoming capital requirements to fund its ventures, while at the same time maintaining its net gearing levels below the 1.0 times threshold. “Nonetheless, we expect the placement to be well-subscribed, and should not significantly erode the group’s return on equity. “We continue to like Serba Dinamik given its superb track record of earnings growth delivery, ” it said. TA Securities estimated dilution of 7%-8% in Serba Dinamik’s EPS for financial years 2021 and 2022 post completion of the placement exercise. It added that Serba Dinamik’s net gearing for FY2021 would improve from 1.02 times to 0.76 times. “We view the EPS dilution as reasonable, given significant long-term earnings expansion from the Abu Dhabi projects. “In particular, recall that the bulk of project revenue for Abu Dhabi Innovation Hub (ADIH) will be recognised in mid-2021 upon commencement of physical construction works, ” it said in a report yesterday. Earlier this year, Serba Dinamik announced it won the ADIH contract worth RM7.7bil. RHB Research expected the ADIH project to generate about RM700mil-RM800mil in revenue in FY21, which is about 13% of Serba Dinamik’s FY21 forecast turnover. “While the company is not in financial distress, the reduction of its net gearing will also address concerns on its short-term liquidity and escalating gearing level, ” it said. On Monday, Serba Dinamik announced that it plans to raise between RM515mil and RM650mil from a private placement to finance its working capital and repay bank borrowings. AmInvestment Bank reckoned that Serba Dinamik may review its current dividend policy of 30% given the group’s expanding working capital requirement. “Serba Dinamik’s outstanding order book of RM18.7bil has already exceeded the group’s earlier FY20F target of RM15bil, ” it said.
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