International energy services group, Serba Dinamik Holdings Bhd has been exceeding expectations since it first listed in February, and UOB Kay Hian expects the group to maintain that momentum.

In a report published Monday, the research house put a target price of RM4.00 on Serba’s shares, an approximately 37 percent increase from the company’s current share price.

UOB says, Serba’s recurring maintenance revenue will be driven by high renewals in its orderbook which exceeds RM5 bil, as well as its plans to acquire assets. It says this will also be driven by Serba’s active international expansion and its current efforts to secure contracts from a RM10 bil global tenderbook.

The research house also remained bullish on Serba due to its continuous diversification of revenue, the latest being to penetrate Africa.

It says, Serba also has a diversified customer mix in its Operations & Maintenance (O&M) segment, ranging from refineries, power plants and liquefied natural gas (LNG) plants, making this revenue stream more resilient to industry cycles. It adds, Serba’s end-customers are also of high quality such as Petronas, Pertamina, Saudi Aramco, Qatar Gas, and Junaco.

UOB says, key to Serba’s growth from strength to strength was its entrance into the Middle East. First entering the region in 2001, Serba now has presence in 6 countries in the Middle East, contributing to more than 60 percent of its total revenue for the first nine months of 2017. This is compared to the revenue share from Malaysia which is below 30 percent, while orderbook tenures in the Middle East are also healthy at 1 to 5 years.

Going forward, UOB expects the group to sustain growth by leveraging on orderbook renewal, of which it has a track record of 20-30 percent success rate.

It says, this will be strengthened by asset ownership strategies and by its strategy to invest in joint ventures (25-40 percent stakes) of downstream plants and utilities.