Gadang FY2014 earnings projected to grow by 1.4 times, says JFApex Securities

by **Cals** Sat 26 Apr 2014, 18:14

Business & Markets 2014

Written by Jonathan Gan of theedgemalaysia.com

Friday, 25 April 2014 11:10
KUALA LUMPUR (Apr 25): Gadang Holdings Bhd FY2014 earnings are projected to grow by 143.3%, according to JFApex Securities Bhd.
In a note today, the research house had made changes to their earnings forecasts having underestimated the earnings margins of the company.
Analyst Soong Wei Siang of JFApex Securities said: “We made changes to our earnings forecasts as we had underestimated the earnings margins of its construction and property projects.”
“Thus, we impute higher margins to both divisions, resulting in 5%-49% upward revision to ourFY2014F-FY2016F earnings forecasts.”
Soong maintained his Buy rating on the stock with a higher target price of RM2.81 per share (from RM2.67).
“Despite a 45% surge of share price following our result preview report issueda fortnight ago, we believe the recent rally of the stock still has legs given its strong earnings potential, which have notbeen fully priced in.”
Soong has declared the company “the cherry-pick of the sector” citing its sterling results in 3QFY2014. 3
“We favour the Group for its well diversified business model with exposure in construction, property, utilities and plantation divisions. Also, we like the Group’s approach to unlock the value of its Johor land with quick turnaround strategy in the form of JV in Capital City, which could drive the earnings in the medium term,” he said.