Results Preview JF ups Gadang TP by 46% to RM2.67; higher earnings seen

by **Cals** Thu 10 Apr 2014, 13:41

Results Preview JF ups Gadang TP by 46% to RM2.67; higher earnings seen

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 10 April 2014 11:43

KUALA LUMPUR (Apr 10): JF Apex Securities has raised its target price (TP) for Gadang Holdings Bhd to RM2.67 from RM1.43 previously, as it sees the construction firm’s 9M FY14 earnings rising 40% year-on-year (y-o-y) to RM25 million.

For the full-year, the research house expects the group’s net profit to soar 63% y-o-y to RM33.4 million.

At 11.33 am today, Gadang was traded at RM1.33.

In a note today ahead of Gadang’s financial results, JF Apex said it is maintaining a ‘buy’ call on the stock at RM1.30.

“The higher earnings will be largely underpinned by the accelerated progress of MRT V2 package worth RM863.4 million, in line with the overall MRT progress,” said analyst Soong Wei Siang of JF Apex.

“Also, the newly-clinched joint venture project in Capital City, Johor Bahru, could drive earnings in the medium term, with FY15F net earnings poised to skyrocket 123% y-o-y.”

Soong said FY15F and FY16F earnings will be nudged higher by 74% and 93% respectively, but FY14F earnings will stay unchanged.

He said Gadang’s outstanding order book of circa RM1 billion will provide earnings visibility in the next two years. It also has an order book replenishment in the pipeline as the group is bidding for projects worth a total RM6 billion.

Soong added he likes the company for its diversified business model with exposure in construction, property, utilities and plantation.