7 Jun 2018 · KUALA LUMPUR: Following expectations of the East Coast Rail Link (ECRL) not being shelved, stocks of construction companies linked to the rail project rebounded yesterday. ... Hence, shares of construction companies such as Gabungan AQRS Bhd , George Kent (M) Bhd and Lafarge Malaysia ...
Gadang Holdings Bhd has bagged a contract worth RM38.52 million to build a tiered bridge connecting the northern and southern sites of Tun Razak Exchange Development (TRX) from TRX City Sdn Bhd.
Its unit Gadang Engineering (M) Sdn Bhd was awarded the contract to build the bridge, comprising a passage for vehicles, walkways for pedestrials, and a closed passage for utility installations on the ground floor.
The project is expected to commence on July 1 and is targeted for completion in the third quarter of 2020.
Gadang (GADG MK MYR0.69, Not rated): Bagged MYR38m TRX job
• Awarded a MYR38.5m contract by TRX City S/B. • Earnings will be underpinned by ~MYR1.5b order book. • Trading at 7.3x consensus FY5/20 EPS.
What’s New? Gadang’s wholly owned subsidiary, Gadang Engineering S/B, was awarded a MYR38.5m contract by TRX City S/B to build a tiered bridge connecting the northern and southern sites of Tun Razak Exchange Development (TRX). The project, which will commence on 1 Jul, is expected to be completed by 3Q20.
This is the first job win of the year, lifting its order book to approximately MYR1.47b, equivalent to 2.5x its FY5/18 revenue. Assuming a construction PBT margin of 11% (1HFY5/19: 11.9%), this project is expected to contribute ~MYR3.2m to its bottom line over the duration of the project.
Construction will remain key. The strong jobs pipeline implies that construction will remain as Gadang’s key earnings driver for the next few years. This division contributed ~46% to its 1HFY5/16 PBT. The group is targeting to secure up to MYR500m worth of jobs this year and it is tendering for some of the major projects such as the Pan Borneo Highway Sabah and hospital projects.
Property and utility. Apart from construction, Gadang’s earnings could also be propelled by 1) property division which have an unbilled sales of MYR100.8m – banking on Capital City integrated complex development in Johor, in which Gadang is entitled to 16.7% of the gross development value (GDV) amounting to MYR1.8b; and 2) utility division which currently operates four water treatment plants in Indonesia, which is expected to generate stable recurring income to the group.
Valuation. Against the healthy outlook, the street is forecasting a 152% 2-year EPS CAGR for FY5/19-21. Brokers are positively biased on the stock with two Buys and one Hold. The mean target price is MYR0.71. At current price, the stock is trading at 7.3x consensus FY5/20 EPS of 9.5sen.
On Thursday, DWL’s unit Million Rich Development Sdn Bhd (MRDSB) entered into the pre-bid consortium agreement with Gadang Engineering (M) Sdn Bhd (GESB).
GESB will have a 70% stake in the “DWL-Gadang Consortium”, while MRDSB will own the remaining 30%.
Industry sources say that this consortium will be gunning jobs in the recently revived East Coast Rail Link (ECRL) project and the massive Pan Borneo Highway, among others.
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walkfasterthanu
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Posted by walkfasterthanu > 2019-04-10 15:28 | Report Abuse
can we buy gadang to hold for like 2 or 3 years