KUALA LUMPUR: 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.