Binastra Corp gets RM283m KL apartment construction contract
From
| 06/09/2024
Its outstanding order book now amounts to RM2.8 billion, which would provide earnings for the next four years. KUALA LUMPUR...
Read More
TA Securities downgrades Gadang to ‘sell’, cuts target price to 37 sen
KUALA LUMPUR (July 25): Shares of Gadang Holdings Bhd (KL:GADANG) erased three weeks of gains after TA Securities, the sole research house covering the stock, downgraded the construction company to ‘sell’ on weaker-than-expected results.
Gadang fell more than 5% to 47 sen, its lowest since July 2. The stock was trading at 45 sen at 9.20am, giving the company a market capitalisation of RM324 million on Bursa Malaysia. Trading volume totaled over 2.7 million shares so far.
TA Securities also cut target price to 37 sen from 55 sen. Excluding extraordinary gains totalling RM3.2 million, Gadang’s core net profit of RM1.5 million (+165.6% year-on-year) for the financial year ended May 31, 2024 (FY2024) fell short of house expectations, making up only 15.2% of the full-year estimate.
In a note on Thursday, the research house said this negative variance was primarily due to higher-than-anticipated project operating costs and tax expenses.
“Given the weaker-than-expected results, we have made the following adjustment to our FY2025/FY2026 earnings estimates: i) revised our progress billing and margin assumptions for certain ongoing construction projects, and ii) adjusted our effective tax rate assumption higher, considering the historically high tax structure. As a result, our earnings estimates for FY2025/FY2026 have been revised downward by 21.6% and 35.8% respectively.
“Additionally, we introduce our FY2027 earnings estimate, anticipating an earnings growth of 16%,” the research house said.
TA Securities said as of end-May, Gadang’s construction order book and unbilled property sales stood at RM1.1 billion (equivalent to 4.1 times FY2024 construction revenue) and RM202.3 million respectively, indicating a positive earnings outlook.
“The property division is expected to remain a key earnings contributor, supported by attractive sales incentives.
“However, we are cautious about the construction division’s progress, which may face higher operating costs due to delays,” the house said.
Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!
Source: EdgeProp.my
POST YOUR COMMENTS