PETALING JAYA: Gadang Holdings Bhd
can look forward to better quarters ahead, says TA Research.
As of end-August this year, the group’s outstanding construction order book stood at RM1.3bil, translating to about 4.1 times of financial year 2022 (FY22) construction revenue, the research house noted.
Gadang’s property division’s unbilled sales also improved further to RM281mil from RM215mil a quarter ago.
According to TA Research, excluding an exceptional net loss amounting to RM1.1mil, Gadang’s first quarter of FY23 (1Q23) core profit of RM4.3mil came in at 14.9% of its full-year estimate.
“We deem the results to be within expectation as we expect the earnings to be largely back-end loaded, given that construction materials prices have started to normalise,” the research house said in its note to clients.
On year-on-year basis, 1Q23 core profit dropped 6.0% to RM4.3mil while revenue fell by 5.4% to RM127.4mil.
“The softer earnings performance was mainly dragged by lower earnings contributions from both construction and utilities divisions.
Nevertheless, the group managed to record a higher pre-tax profit of RM8.4mil for the property division, an increase of 75.8% from RM4.8mil a year ago, largely thanks to better sales and higher work progress for ongoing development projects.
While quarter-on-quarter basis, despite revenue falling by 7.8%, the group returned to the black by recording a core profit of RM4.3mil in 1Q23 compared with a core loss of RM6.6mil mainly due to higher earnings contribution from both construction and property divisions.
For now, TA Research has maintained its FY23 to FY25 earnings forecasts on Gadang.
It also maintained “sell” call on the stock with a target price of 30 sen based on sum-of-parts valuation.
