Facility Management (FM) service provider. Established since 2000, GFM is a pure play FM company delivering optimal facility services solutions to a diversified clientele base for (i) Assets & Building and (ii) Workforce lodging. The group is also in the midst of penetrating into the Highway Rest & Service Area (RSA) and O&G downstream segments. GFM also holds a 23-year concession for UiTM Mukah campus which will contribute RM1.1bn over the next 23 years ending 2035.

Istana Negara contract to drive growth in FY23. As of Sep 22, GFM’s outstanding orderbook stood at RM1.36bn, which was higher than FY22 and FY21 levels of RM1.1bn and RM1.2bn. This is backed by the recently secured FM contract for the Istana Negara, which is valued at RM367m over five years and has an estimated revenue contribution of c.RM59.1m annually (ex the income for repair and replacement). Despite the expiration of two FM contracts (BNM and PERKESO) in FY23, we are optimistic that GFM’s core PATAMI is on track to post a strong YoY growth in FY23 with the full impact from the Istana Negara contract (which helped to boost 3Q22 net profit margin at 20.1% from 7.8% QoQ).

Diversifying to O&G maintenance space. To venture into more high-value-added O&G space, GFM had in 2019 proposed to subscribe a 49% stake and up to RM20m worth of RCPS in a downstream O&G player High Base Strategic Sdn Bhd (HSSB). Through HSSB’s 51%-owned joint venture with Singapore-based O&G integrated solutions provider Mun Siong Engineering Limited, HSSB is one of the five players who has secured the PETRONAS’ Integrated Turnaround Main Mechanical and Maintenance Mechanical Static (“TA4MS”) contracts located in Pegerang Integrated complex. Management expects the acquisition to be done in 2H23. Overall, the acquisition will strategically position GFM in O&G maintenance space and widen its customer base, as well as increase its credibility to bid for similar types of projects.

Higher high formation. Technically, GFM is trading near its uptrend support levels of RM0.20-0.21, with indicators on the mend. A successful breakout above RM0.23 hurdle will spur the share price toward RM0.25-0.28-0.30, forming a higher high pattern. Cut lost at RM0.18.

Source: Hong Leong Investment Bank Research - 31 Jan 2023