Gabungan AQRS stays as Affin Hwang's top sector 'buy' but with reduced target price

TheEdge Mon, Dec 02, 2019 11:15am - 4 years View Original


KUALA LUMPUR (Dec 2): Affin Hwang Investment Bank Bhd cut its target price (TP) for Gabungan AQRS Bhd shares to RM1.62 from RM1.82 after Affin Hwang reduced its construction earnings assumption for Gabungan AQRS to RM70 million from RM80 million and took into account the company's higher net debt.

In a note today, Affin Hwang analyst Loong Chee Wei said Affin Hwang had also cut its core earnings per share (EPS) forecast for Gabungan AQRS.

"Gabungan AQRS remains our top sector BUY with reduced TP of RM1.62, based on 20% discount to revalued net asset value (RNAV). We cut our RNAV/share for Gabungan AQRS to RM2.02 (from RM2.28) to reflect lower construction arm valuation (sustainable earnings assumption reduced to RM70 million from RM80 million) and higher net debt in the third quarter ended Sept 30, 2019 (3QFY19). Based on the same 20% discount to RNAV, we cut our 12-month TP to RM1.62 from RM1.82.

"Given the slow ramp up in progress billings and delay in winning new contracts, we cut our core FY2019-FY2022E EPS forecasts by 31%-36%," Loong said.

At 10:28am today, Gabungan AQRS shares were traded one sen or 0.83% lower at RM1.20.

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