KUALA LUMPUR: As construction activities pick up gradually following the easing of the lockdown, Gadang Holdings Bhd is expected to secure more contracts.
Recently, Gadang Holdings secured two ECRL packages worth RM81mil amid the rebound in economic activities.
JF Apex Securities Bhd said the group is expected to win more contracts, adding that a mounting stimulus package, low interest rates and positive development on Covid-19 vaccine would help stimulate the country’s economic activities.
“We maintain our financial year ending May 31,2021 forecast (FY21F) net earnings forecast and introduce our FY22F net earnings forecast of RM60.4mil on the back of acceleration of economic rebound from March’s bottom as well as firm government stance in supporting traditional business sectors in tourism, oil and gas, and services, ” it said.
The group posted a lower revenue of RM115.6mil and profit before tax of RM6.6mil in its fourth quarter ended May 31,2020, dragged by lower recognition of construction progress as well as closure of property sales galleries during the movement control order period.
For its FY20 results, Gadang Holdings recorded a lower revenue and net profit of RM673mil and RM36.1mil compared to a year ago.
“We deem the group’s FY20 result below our/consensus expectations, matching 82.5%/90% of full year net earnings forecast.
“We anticipate better quarter ahead pursuant to the easing of lockdown and restarting of economy activities which would accelerate the performances of construction and property sectors, ” JF Apex said.
Meanwhile, the research house is keeping a “buy” call on Gadang Holdings with an unchanged target price of 59 sen.
“Our revised target price is pegged at unchanged price-to-earnings ratio multiple of nine times FY21F earnings per share amid gradual pick up in construction activities and awards, ” it said.