9261 Gadang 1H 2018

9261 Gadang Holdings Berhad listed in Construction sectors, running 3 cores business such as  Construction, Properties, and Utility.

We can see from above 5 years data, company is making money every years, net profit is increasing and the profit margin is double digits.

Fundamental:

Total Asset RM1.536,168m
Cash RM212,354m
Total Liabilities RM878,029m
Total Borrowings RM278,157m
Total Equity RM658,139m

Based on the Q2 2018 quarter report, below is their business prospect for FY2018

The Board forecast the current year performance to be resilient with stable margins derived from on-going
construction activities. Overall, the Group’s involvement in more technically complex infrastructure projects
and its focus on affordable homes are the key contributors for the sustainable results. Broadly, the Group’s initiatives adopted to sustain the year results are as follows:-

(a) Construction Division
This Division is cautiously tendering for larger Government’s infrastructure and building projects and has to-date gained good market traction with an outstanding order book value of some RM1.62 billion which consist of RAPID package 301 and 402, KVMRT V206, TRX and Cyberjaya Hospital. The outstanding order book provides earning visibility to the group for the next 2-3 years.

(b) Property Division
The Division has a total land bank size (including joint venture projects) of 442.20 acres with a total estimated gross development value (GDV) of RM3.76 billion. The Division will remain focused on affordable homes in line with the present market demand. The unbilled sales as at to date stand at RM133.20 million. The on-going projects are:

Future development:

  • Kwasa Land Selangor GDV RM707m
  • Semenyih Land Selangor GDV RM476m
  • Melawati Land Selangor GDV RM365m
  • Pontian Land Johor GDV RM550m

(c) Utility Division
The stable recurring income from the 4 operating water treatment plants are expected to increase during the financial year. The mini hydro project of 9MW in Indonesia is expected to be income generating by the first quarter of the financial year 2019

Technical:

We can see from the chart that currently the share price is below SMA200 which is in down trend. Share price hit bottom at RM0.80 which is 52w low. Finally today rebound back to RM0.865. Further resistance point at RM0.94 & RM1.01 where support point at RM0.80.

Opportunity:

  • Good fundamental, strong cash on hand, paying dividend yearly
  • Benefit from mega infrastructure projects like MRT3 and HSR, ECRL, Pan-Borneo Sabah
  • Remaining RM260m revenue or RM171m profit to be recognize from Capital City
  • Share price touching 52w & 2 years low, increase margin of safety
  • Director/CEO keep buying, Lembaga Tabung Haji & Employee Provident Fund as substantial shareholders

Risk:

  • Trade war between US & China affecting world market
  • Malaysia 14th General Election affecting local market
  • Rise in operating cost such as steel & labour

Conclusion:

Gadang is a solid company with proven track record. Currently the share price RM0.865 trading  at P/E ratio 5.6 only, with NTA of RM0.99, this stock is undervalued.

 

Disclaimer: The information in this article has been compiled from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This article is for information sharing only, author accept no liability for any direct or indirect loss arising from the use of this article.

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