Gadang Holdings Bhd has seen a good run in the past year, surging 63.8% in the past year to close at 48 sen on June 18. Interest on the counter heightened on June 14 when it touched a 52-week high of 52 sen.

It would have a been a bountiful time for investors who managed to enter at its low of 28 sen last June. While the counter has had its good run, the question is whether this is sustainable.

Indeed signs are pointing towards a continuation of the current upward momentum in the near term. A bullish bias may emerge above the 48 sen level with stop-loss set at 45 sen. Towards the upside, near-term resistance level is seen at 55 sen followed by 60 sen.

The positive run is despite Gadang posting disappointing results recently. The construction and property development outfit was drag going mainly by lower-than-expected revenue recognition from existing construction projects, and higher-than-anticipated raw material costs.

Luckily, raw material costs are seen to be stabilising. The construction sector is exto remain robust throughout the year, following the announcement of the Penang LRT project in late March 2024.

This positive outlook is supported by the potential launch of additional railway-related projects and flood mitigation initiatives. While there is considerable interest in the KL-SG highspeed rail (HSR) project, further updates are anticipated in Budget 2025, or by the end of the year.

However, TA Securities has maintained its “sell” rating on Gadang at 41 sen with a lower target price of 23 sen from 28 sen due to stretched valuation.

The research house said stripping off some one-off items, Gadang registered lower core earnings of RM7.8 million (-6.9% year-on-year) for the first half ended Nov 30, 2023. It said the results were disappointing as it accounted for only 36.6% of TA's full-year projection.

The research house said the negative variance was mainly due to various factors including slower-than-expected work progress for certain projects. Gadang was also dragged by higher operating expenses in the construction and utilities divisions.

With the current buzz on data centers, it would not be surprising if Gadang gravitates toward this direction and propel its share price higher.