Gagason bullish on affordable housing sector

Bursa debut: Gagasan chairman Dr Muhamad Fuad Abdullah hitting the gong to mark the company’s listing ceromony on Bursa Malaysia. With him are (from left) non-execitive director Siti Naaishah, group managing director Wan Azman Wan Kamal, non-executive directors Ch’ng Boon Huat and Datuk Seri Subahan Kamal, and TA Securities Bhd executive director Datuk Hamzah Mohd Tahir.

KUALA LUMPUR: Gagasan Nadi Cergas Bhd, which made an impressive debut on the ACE Market with a 30% premium on its issue price, is bullish over the affordable housing sector.

Group managing director Wan Azman Wan Kamal said this is due to the shortage of affordable homes and the probability that it would secure more projects.

Demand is also high under the 11th Malaysia Plan, where about 200,000 units are expected to be built, Wan Azman added.

“We will remain bullish at least for years to come and that we probably will secure more in the future.

“There is a shortage in affordable housing and we have demonstrated on Monday by securing a job from Putrajaya Homes,” he told a press conference after the company’s listing ceremony.

Wan Azman believed that 60% of the housing loans approved in 2018 were for affordable homes – those priced RM500,000 and below.

He said there are also commitments from many developers to build affordable housing such as Rumah Selangorku, Rumawip (Federal Territories Affordable Housing), PPAM (Civil Servants Housing Project) and PR1MA (1Malaysia People’s Housing Scheme).

Gagasan Nadi – which is mainly involved in construction and utilities – debuted on the ACE Market at 39 sen, a 9 sen increase from its initial public offering (IPO) price of 30 sen, with 8.952 million shares traded.

The stock closed higher by 1.67%, or 0.5 sen, at 30.5 sen with a total of 118 million shares traded. It was the day’s second most actively traded counter.

The stock had an oversubscription rate of 20.2 times.

It had raised RM60mil from its IPO – RM42mil via public issue of new shares and RM18mil from the offer for sale of existing shares.

A day before the listing, the company secured a RM110mil residential development contract from Putrajaya Home Sdn Bhd via its wholly owned subsidiary Nadi Cergas Sdn Bhd.

The contract entails the proposed construction and completion of public residential development in Precint 11, consisting two blocks of 16-storey and 17-storey apartments with a total of 463 units, facilities and upgrading works.

Wan Azman said that while Gagasan Nadi’s business is mainly affordable housing projects, it would also participate in tenders for other government facilities such as hospitals and army camps.

To a question whether the company would take up private jobs, he said it would be very selective.

“We have to study whether they are ideal customers or not, payment wise, and their track record before we participate.

“Our priority will be for (projects by) government-linked companies because we want to be assured of payments. That will always be our concern from day one,” he said.

On Gagasan Nadi’s order book, Wan Azman said the amount of about RM700mil is able to sustain the company until 2022.

He added that it has a 46.94ha residential land next to the Mara Junior Science College (MRSM) in Ulu Yam and a 0.2ha commercial land in Lorong Haji Hussein 2, Chow Kit, for future projects.

“We’re not in a hurry to develop these two land parcels. It’s more of an investment. We are also not aggressively looking to expand our land bank unless it’s a really good piece,” he said.

Wan Azman added that the company has a 20-year track record where it has secured over RM3bil worth of projects.

Gagasan Nadi is the second company to be listed on the ACE Market this year, after DPI Holdings Bhd on Monday.


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