More than a construction play


Azizan: I have rewarded shareholders with dividends and free warrants worth 12 sen since taking over the helm.

Azizan: I have rewarded shareholders with dividends and free warrants worth 12 sen since taking over the helm.

CEO says property development will be game changer generating cash for dividends

IT’S not surprising that sentiment on construction player Gabungan AQRS Bhd has been muted. Reviews and cancellations of major local infrastructure projects are the reasons for that.

As a result, shares in Gabungan have been on a roller-coaster ride falling to a low of 62.4 sen last May.

Its share price has recovered slightly and is hovering around 90 sen a unit, which translates into a historical price-earnings (PE) multiple of 6.88 times – among the lowest of construction companies on Bursa Malaysia.

So is Gabungan’s future earnings negatively affected or is the stock suffering more from a sentiment-driven selldown?

The four research houses on Bloomberg data that cover the stock believe it is the latter– they have a “buy” call on the stock, with a consensus target price of RM1.74 a share. That represents a massive 93% upside.

Interestingly, a broker’s note to clients redefines Gabungan as a dividend stock. The note says Gabungan is likely to pay a minimum of 10 sen per share per year over the next five years.

Speaking to StarBizWeek, Gabungan’s largest shareholder and chief executive officer Datuk Azizan Jaafar does not rule out the healthy dividend payout scenario.

Since taking over the troubled company in 2016, Azizan has lowered its debt levels and operating expenses, secured projects as well as boosted cash flows.

As of Sept 30, 2018, Gabungan’s gearing level stood at 0.14 times compared with 0.83 times two years ago.

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Construction , Gabungan