AmResearch maintains its BUY rating on SCOMI GROUP BHD [] but have raised its fair value to 80 sen a share (from 76 sen a share previously) based on 5% discount to its sum-of-parts (SOP) of 84 sen a share.
“We believe Scomi is undervalued, as it will certainly benefit from potential new contracts for SCOMI ENGINEERING BHD [] (SEB) - its 70%-owned subsidiary,” it said on Thursday, July 29.
Scomi associate SCOMI MARINE BHD []'s (SMB) recent proposed disposal of its Indonesian associate could result in impairment losses of RM433 million - Scomi's portion: RM185mil.
AmResearch said operational wise, its oil & gas unit will ride on stronger drilling activities globally. Scomi does have a pedigree in monorail works based on track record.
“We believe Scomi's subsidiary SEB is a leading candidate for the KL Monorail expansion. In addition there could be more earnings upside (a further 15%-20%) for SEB, via: (i) LRT - Ampang/Kelana Jaya extension & new Cheras-Kota Damansara line; and (ii) MRT involvement - via M&E works - worth RM400 million to RM500 million,” it said.
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