KUALA LUMPUR: Shares of Gabungan AQRS (GAQRS) fell to a low of RM1.18 on Thursday, extending the decline after the government scrapped the RM55bil East Coast Rail Link (ECRL) project due to the country’s fiscal constraints.
At 11.02am, it was down five sen to RM1.18 with 2.09 million shares done. But the decline was less steep compared with Tuesday after the announcement was made.
The FBM KLCI rose 8.37 points or 0.47% to 1,806.48. Turnover was 921.62 million shares valued at RM684.85mil. There were 404 gainers, 323 losers and 318 counters unchanged.
UOB Kay Hian Malaysia Research reaffirmed its buy call recommendation at RM1.23, while maintaining its target price of RM1.86 and earnings forecasts.
It explained that it had not factored in job wins from the ECRL project in its annual order book replenishment target for the company.
“Our annual order book assumptions 2018-20 are RM500mil, RM600mil and RM700mil respectively.
“Our unchanged valuation for GAQRS is premised upon: a) strong outstanding orderbook of RM2.5bil as of June 2018 (2.3 times 2018F revenue), and b) the five-year plan to resuscitate its property arm which is expected to contribute considerable earnings in the coming years,” it explained.
For GAQRS’s property arm, its affordable apartment project called E’Island has received encouraging response from buyers, with almost 500 buyers having registered their interest before its official launch in December 2018.
Also the property transformation plan is expected to reward shareholders with an alluring annual dividend of 10sen/share, with potential upside assuming the company decides to distribute profit
from the construction arm to shareholders.
“On a separate note, GAQRS is confident of securing new job wins of RM1.5b in 2018, mainly from Pan Borneo Highway Sabah (more than RM2bil) and others civil contract works.
“Maintain buy with a target price of RM1.86, based on 10 times 2019F fully-diluted EPS of 18.6 sen, as small-mid caps de-rate to reflect tighter market liquidity,” it said.