Sunday 17 January 2021

SCIB Updates: Free Warrants On The Way

Finally SCIB's free warrants ex-date & exercise price have been announced. Shareholders have been waiting for it until sore neck.

The exercise price is fixed at RM1.77 per warrant which is higher than latest mother share's closing price of RM1.70, and it will be ex-ed on 2nd Feb 2021.

The reason I haven't sold any of my SCIB shares yet is because of this free warrants, it's quite a "generous" offer of 1 free warrant for every 2 SCIB shares.

Now the bonus shares and warrants are done, how about the future of this company?

After the new management took over in mid 2019, SCIB was awarded a total of RM175.4mil new contracts in the second half of that year.

In year 2020, it secured a whopping RM1.84 billion worth of new contracts, which exceeded management guided figure of RM1.5bil.

SCIB contracts

25/10/19 RM117.2mil:
Oct19 - May20 (Indon)
Oct19 - Oct20 (Qatar)
Oct19 - Oct20 (Oman)

25/10/19 RM58.2mil: Nov19 - Jun20 (Mas)

3/4/20 RM864.5mil (USD200.45mil)Apr20 - Apr21 (Oman & Qatar)

18/8/20 RM55.6mil (USD13.2mil): Oct20 - Apr21 (Indon)

18/8/20 RM607.8mil (USD145mil): Oct20 - Sep24 (UAE)

18/8/20 RM43.9mil: Oct20 - May21 (Mas)

3/12/20 RM18.3mil: Oct20 - Mac22 (Mas)

3/12/20 RM252.8 mil (USD62mil): Dec20 - Nov21 (Qatar)

Total contracts won in 2019: RM175.4mil

Total contracts won in 2020: RM1,843mil

If we study these contracts carefully, we'll notice that year 2021 will be the year most contract values will be recognized, and it does not even include future contracts to be secured in 2021.

Its largest contract is the RM864.5mil Oman & Qatar contract which runs for only one year from Apr20 to Apr21 if there is no delay by the pandemic.

However, we know that they have been delayed. 

For the first 6 months when the first contract started (from Oct19 to Mac20), SCIB only recognized RM44mil of construction revenue.

For the subsequent 6 months from Apr20 to Sep20 when the huge RM864.5mil Oman & Qatar contract started to kick in, it has just recognized RM246mil of overall construction revenue.

Depending on how long the contracts are delayed, I think that its construction revenue will continue its increasing trend from FY20Q4 all the way to FY21Q2. 

After that it might depend on how many new contracts it can secure in the first half of year 2021.

I have never attended any AGM/EGM before, and my first experience was the virtual EGM of SCIB in Nov20. I registered, viewed and voted online through Tricor and it was very simple.

I was surprised to be given an RM50 touch n go reload voucher after that.

As I was working at the time of EGM, I was interrupted and did not listen thoroughly to the EGM.

The important take home messages I received from that EGM were those Datuk Abdul Karim always mentioned in his interviews such as sustainability, industrial 4.0 with 3D printing and the most important one, SCIB will end year 2021 with at least RM2.5bil unbilled contracts on hands.

So far SCIB under Datuk Abdul Karim has won a total of RM2 billion contracts, and only one significant contract (RM607.8mil from UAE) runs beyond year 2021. 

I predict that it will end year 2020 with around RM1.4bil worth of unbilled contracts, and another ~RM1bil will be recognized in 2021.

So, if it were to fulfill its prediction of RM2.5bil unbilled contract value in the end of 2021, SCIB has to win another RM2 billion new contracts this year.

If this is true, then it will be another exciting year for SCIB despite a slow construction sector recovery.

All these are just my own opinion and estimation. Readers are advised to study the company themselves to decide whether they should buy or sell its shares.


  1. In this SCIB case, i wonder what is the PE multiple u would give and what is the target price.
    If i remember correctly, the target price was RM8 per share based on the targeted market cap given by the major shareholder. RM8 (b4 bonus issue) is equal to ~RM2 (after bonus issue). Therefore, your tp is RM2 per share ?

    Based on the contract wins (or to win), it seems like the sky is the limit for SCIB.

    1. Last year my first target was RM6 and longer term is RM8 (before bonus issue). However, I've learned that I should not set target price for a company which is in high growth phase. I did it with KPower and it backfired. So I didn't calculate and mention the TP here. Anyway I still fix it at RM8 (RM2 after bonus) and expect to raise it if big contracts continue to flow in this year.