Strong earnings visibility with a solid RM1.3bn orderbook. Excluding the washedout FY20, GBGAQRS is likely to record a strong 20% EPS CAGR from FY19-22, premised on the solid outstanding order book of RM1.3bn (offers 3Y earnings visibility) as well as anticipated higher property sales on stamp duty exemption and lower mortgage financing rates. In addition, the group would be one of the frontrunners for the continuation of mega public infra projects such as MRT, HSR, KVDT2, Pan-Borneo Sabah Highway and ECRL, which would bode well with its orderbook replenishment, given GBGAQRS extensive experience in elevated structures such as LRT3 and SUKE highway that requires value-added engineering know-how. Valuations are undemanding at 9.6x FY21E P/E (vs 2Y mean 12.3x and industry 15x) and 0.82x P/B (vs 2Y mean 1x), supported by a decent 4.1% DY.

A bullish rounding bottom formation. After tumbling 53% from 52W high of RM1.24 (16 Dec 2019) to a low of RM0.58 (2 Nov), GBGAQRS share prices have firmed up to close above multiple key SMAs and a rounding bottom pattern is taking shape. To recap, a rounding bottom pattern represents a long consolidation period that turns from a bearish bias to a bullish bias. A successful breakout above RM0.73 neckline will spur prices towards RM0.80 and RM0.825 (38.2% FR) before hitting our LT target at RM0.90 (50% FR) levels. Supports are pegged at RM0.70 and RM0.68 (mid BB). Cut loss at RM0.66.

Source: Hong Leong Investment Bank Research - 14 Dec 2020