The research house has a last target price of 56 sen assigned to the counter based on 0.55x price-book value, which is one standard deviation below mean.
According to Kenanga, the group is expected to face a challenging outlook as it is yet to secure any new external construction projects since December 2016 and is likely to loose its project delivery partners role in the LRT3 project.
The group's current construction order book stands at about RM3bil, of which more than 95% is derived from the LRT3 at RM2.8bil.
"With the recent arbitration results favoring MRCB over GKENT in regards to the LRT3 funding dispute; we foresee the former acquiring latter’s 50% stake in the PDP once the independent valuer finalizes the valuation for the JV stake.
"Subsequent to that, GKENT will no longer play a part in the LRT3 and would lose a sizeable chunk from its outstanding order-book," said Kenanga.
It added that George Kent's venture into the glove space with a 40% stake in Dynacare is untimely given that glove prices have come off their peak with stiffer competition from capacity additions and less pressing demand from the global healthcare space.
Of the RM624mil glove plant contracted awarded by Johan, Kenanga has only imputed RM50mil worth of replenishment as it does not foresee its glove venture following through with the entire contract sum.
Recently, George Kent posted a two-month earnings of RM11.3mil following its change in financial-year end from January to March.
Compared against Kenanga's and consensus pre-adjustment FY22 earnings of RM53mil, the two-month earnings of RM11.3mil fall within estimate at 21%.