PETALING JAYA: Gadang Holdings Bhd
is expected to chart a stronger year ahead, following the completion of its kitchen-sinking exercise after posting a financial year 2023 (FY23) core net loss of RM2.7mil, according to TA Research.
The research house said it was maintaining its FY24 and FY25 earnings forecasts and has introduced a FY26 earnings forecast of RM25.7mil, representing an earnings growth of 7.9%.
As of end-May 2023, the brokerage said the group’s outstanding construction order book stood at RM1.2bil, which could provide earnings visibility to the group at least for the next two years.
On the other hand, the property division’s unbilled sales dropped slightly to RM187.9mil from RM193.7mil a quarter ago.
The group is principally involved in civil engineering and construction, property development, water supply and mechanical and electrical engineering services.
TA Research, which is maintaining a “sell” call on the stock due to valuation grounds, said it was retaining its target price of RM0.28.
Excluding a RM10.6mil impairment loss on goodwill, RM9.4mil impairment loss on concession, RM7.2mil impairment loss on outstanding receivables and contract assets and unrealised gain on foreign exchange of RM2.1mil, as well as other exceptional net loss of RM1.5mil, Gadang reported a FY23 core net loss of RM2.7mil.
“This was below our full-year profit forecast of RM9.4mil. The variance was due to lower-than-expected profit contributions from certain construction projects,” it added.
In its notes on its latest financial performance last week, Gadang said its construction division will continue to bid for construction projects to replenish its current order book.
“The increase in the overnight policy rate to 3%, a cumulative 125-basis-point hike since May 2022, coupled with slower economic growth and shrinking consumer sentiment has weighed on the local property market.
“Notwithstanding the softened market, the property division will continue to focus on the development of mid-range priced residential projects across its development for FY24 to meet market demand.”
Given the economic uncertainties, Gadang said its prospect and performance in the next financial year ending May 31, 2024 remained challenging.
