Wednesday 26 August 2020


SCIB plans private placement to raise RM66.5m to fund future ...

About the same time when acquiring KPower shares, Datuk Abdul Karim of Serba Dinamik emerged as a controlling shareholder of Sarawak Consolidated Industries Berhad (SCIB).

SCIB's share price responded by surging from around 60sen in May19 to RM3.50 in Feb20. Covid-19 bear market dragged it down to RM1 and currently it recovers to RM3 level.

Before the change in major shareholders, SCIB was a struggling loss-making company.

Similar to KPower, I didn't have interest in this kind of loss-making company when the visibility of earning is in doubt.

However, studying KPower in late May20 inevitably brought me to SCIB, and I found that SCIB is an even more exciting company.

SCIB has been awarded a RM864.5mil contract in Oman & Qatar during MCO period in Apr20. It has already bagged RM175mil contract earlier in Q4 of CY2019.

This makes it over RM1 billion contract for a company with an annual revenue of RM80mil.

A more interesting part is, all these contracts are short term of within a year. 

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)

Last week, it announced a few more contracts worth RM707mil. This makes its total contract won so far at RM1.747 billion.

RM608mil (USD145mil): Oct20 - Sep24 (UAE)
RM43.9mil: Oct20 - May21 (Mas)
RM55.6mil (USD13.3mil): Oct20 - Apr21 (Indon)

Total contracts RM1.747 billion

Outstanding shares 85.88mil before private placement
36.75mil private placement @ RM1.82 (42.8%)
Total shares 122.63 mil after private placement

In the last two quarters from FY19Q4 to FY20Q1 when the contracts started to run, construction segment has contributed only RM44mil revenue and RM5.7mil EBIDTA. 

So it's not a surprise to see SCIB's total revenue at RM800mil in subsequent four quarters.

Investors will be worried whether the contracts will dry up after one year. This is a real concern.

Nevertheless, SCIB has earlier announced that it is "expected" to secure contracts worth RM1.37bil with tenures between 24-36 months from Serba Dinamik.

A total of RM651mil has been awarded by Serba Dinamik last week, but the duration of the RM608mil contract in UAE is 48 months.

The new management reveals that SCIB is in the process of obtaining license from Petronas for oil & gas related infrastructure jobs, while also actively looking to acquire another company with such license.

In Mac20, The Edge Weekly reported that SCIB has a tender book of RM4.5bil. Datuk Abdul Karim said that FY2020 will act as a benchmark and the company is targeted to grow 15-20% per year thereafter.

In order to attract institutional investors, he hopes to get SCIB's market cap past RM1 billion mark in 2 years time. In order to do that, SCIB's share price has to be at least RM8.15!

Unlike KPower who has little relation with construction industry prior to the takeover apart from its small property development, SCIB's core business is the manufacturing of various precast concrete products used in construction industry & Industrialised Building System.

It has 3 factories in Kuching, Sarawak and mainly supplies to construction projects in Sarawak.

The new management has plan to make SCIB into an EPCC or EMCC (Engineering, Manufacturing, Construction & Commissioning) company and expand its reach to other states in Malaysia and overseas. 

It has already done so with such contracts from Indonesia & Middle East. It's no longer confined to Sarawak as its name suggests.

Its concrete manufacturing business posted RM3.1mil of EBIDTA in FY2019. It is expected to perform better and double the order books in the future as concrete components of construction projects from KPower, Serbadk & SCIB itself are likely to be sourced from it.

SCIB aims to expand presence beyond Malaysia | Borneo Post Online

With both cylinders of construction & manufacturing arms firing together, there is no doubt that SCIB's revenue and profit will grow by leaps and bounds in the coming quarters, despite the progress might be slowed down by the pandemic lockdown. 

After the recent contracts, it has already fulfilled the internal target of RM1.5 billion in 2020.

SCIB has just completed a private placement to raise the much needed cash of RM66.9mil to carry out its sizable construction works.

A new dividend payout policy of at least 30% is an icing on the cake. This is higher than KPower's 20% payout. It might follow Serbadk to declare dividend every quarter in the future.

SCIB has low liquidity with just 122.6mil outstanding shares even after the private placement. While it does not have the ability to do bonus issue, share split like KPower is an option if it is to improve the liquidity. 

I have a feeling that SCIB will be Serba Dinamik 2.0. That's why I decided to invest in it.

Nothing is without risk though. Please invest at own risk.


  1. SCIB is a good buy.
    Serbak also ventured into ICT segment, and i am surprised by its ICT's earnings in Q2 although it is just a new segment. I think the management of Serbak/SCIB/KPower is really fantastic. Whatver he touches, it turns to gold.
    However, Serbak's stock price (unlike SCIB and KPower) is kind of stagnant. I suppose the reasons are market sees Serbak belongs to unpopular O&G industry (unpopular now), and it has high borrowings.

    1. Yes, Serbadk share price must be affected by its link to O&G. It's a great and growth company as well but KPower & SCIB has the advantage of starting from a really low base

  2. The CEO is very credible, he targets RM1.5b orderbook in year 2020, and has exceeded the target in Aug'20.
    He also targets to achieve RM1b market cap in 2 years time. As u mentioned, this means SCIB's stock price will need to be at least RM8.15 per share (12260000 x RM8.15) to meet RM1b market cap. If the CEO can again show his credibility, the stock price of RM8.15 is not a fantacy.
    I suppose this also means one can consider to buy or add even at current stock price of RM3.30 per share because it still has huge upside.

    1. I think SCIB has a good chance to generate RM100mil net profit a year in the near future to justify its billion dollar market cap status. The CEO is someone special.