GFM to bank on facility management

PETALING JAYA: GFM Services Bhd, which will list on Bursa Malaysia today, should benefit from the growth in the Malaysian facilities management market which is projected to grow at an annual compounded growth rate (CAGR) of 8.58% from 2015 to 2020, according to a report by PublicInvest Research.

The report, published last Friday, said that growth is “underpinned by the implementation of large-scale projects and construction industry growth domestically, as well as a renewed focus to improve the life cycle costs of all projects as well as ensuring a clean, safe and healthy environment for the residents of a facility”.

PublicInvest, which has ascribed a value of GFM shares at 48 sen a piece, noted that GFM stands out in the industry because of its ability to undertake services for a wide clientele base, which in turn has reduced its over reliance on just one particular business segment.

PublicInvest also pointed out that GFM continued to be led by its three founding members, all of whom have strong engineering backgrounds.

“Just as important is the fact that post-listing, they will continue to hold 70.1% of shares in the company with moratorium conditions seeing them holding on to the company for the next four years at the very least.

“Hence their respective interests are tied to the successes of the company which also bodes well for minority shareholders,” the report said.

Meanwhile JF Apex in a report on GFM published on Jan 4, noted that GFM’s business model is cash-generative and has low capital expenditure commitment.

It said GFM, which has a 16 year track record in facilities management services, enjoys high earnings visibility which is backed by recurring income from contracts secured that last for three to five years on average.

The research house projects GFM’s net profits for FY2016 and FY2017 to rise by 24% year on year to RM17.1mil and 3.5% to RM17.7mil respectively.

JF Apex also has a fair value of 48 sen for GFM shares based on 11.5 times the company’s FY2017 projected earnings.

The research house based this on its industry peers, namely AWC Bhd and UEM Edgenta Bhd, which trade at forward price earnings ratios of between 11 to 12 times.

GFM will be listed on the ACE Market today at an offer price of 38 sen per share, the result of a reverse takeover of AsiaEP Resources Bhd.

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