KUALA LUMPUR: MIDF Research upgraded its earnings estimates for Gabungan AQRS Bhd
by RM8.8mil or 23.03% and RM72.1mil or 16.3% for its revenue estimates for FYE17/18/19 on the back of two major developments.
A group of private investors led by Tan Sri David Kong of Nirvana Group has offerred to purchase 100% of Monolight IBS Building System Sdn Bhd, which was previously Gabungan AQRS’ 49% JV, in return of 19.56 million shares or 5.01% stake in the construction and property development firm at RM1.33 per share. AQRS has also proposed the placement of 30 million new shares to expand its working capital.
The research house noted that the exercise would enlarge Gabungan AQRS’ shares from 390 million to 409 million shares or 5%.
“These are two catalytic landmarks in the company’s transformation plan.
“The entrance of new shareholders signals Street’s interest and confidence on Gabungan AQRS’s potential upside,” it said in a note on Monday.
It also noted that the shares of Monolight were atypically exchanged with AQRS’s proposed new shares instead of RM26mil consideration in cash by the new shareholders.
“The new shareholders’ unique entrance is positive to Gabungan AQRS’ bottom-line consequently it is inevitable for us to upgrade our earnings as Monolight’s projects under PR1MA package amounting to RM424.23mil will be recognised fully on the back of 12.0% profit margin for the duration of 36-months,” it said.
Apart from the increase in its earnings estimates, the research house also changed its risk assessment;
expressed in its DCF valuation as 45% certainty equivalent in the expected cash flow projection.
“We believe PR1MA projects have lower risk profile as it is subsidised by the government but risks will flit slightly due to orderbook size,” it said.
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