Ara Damansara job win expected to end GDB’s contract draught

TheEdge Fri, Mar 29, 2019 11:12am - 5 years View Original


GDB Holdings Bhd
(March 28, 29.5 sen)
Maintain buy with a target price (TP) of 33 sen:
GDB Holdings Bhd has accepted a construction job from Trans Resources Corp Sdn Bhd as the Principal Work Contractor for a mixed development at Ara Damansara. The contract is for main builder’s work — architectural, civil and structural work and mechanical and electrical work for Phase 1 of the transit-oriented mixed development which comprises two 18-storey serviced apartment blocks, on an eight-storey podium with seven-storey car park, and one-storey related facility on top of the podium.

 
The long-awaited new job (excluding a smallish RM2.6 million job it secured in 2018) ends the new contract drought since it last secured a major job in 2017. With this job win, its outstanding order book is estimated at about RM670 million, translating into 2.4 times FY18 revenue.

Assuming a gross margin of 9.5%, this project is expected to contribute RM8.8 million of net profit or an earnings per share (EPS) of 1.4 sen throughout the construction period.

Maintain our FY19 to FY21 earnings forecasts as the job win is within our FY19 order book replenishment assumption of RM400 million.

Maintain our “buy” call on GDB with an unchanged TP of 33 sen, based on unchanged eight times CY19 earnings. — TA Securities, March 28

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