KUALA LUMPUR: JF Apex Securities is upbeat on the growth prospects of Gadang Holdings Bhd and issued a buy call on the company with a target price of RM1.47.
The research house said in its note that the company's growth potential look good in light of its prospects of bagging more construction works in the future amid the current boom in infrastructure works.
The firm said that Gadang's construction works is underpinned by RM1.6 billion outstanding order book.
"The construction order book stands at RM1.6 billion after taking account the newly clinched KVMRT2 package V2016 (RM952m). The outstanding book will sustain the group’s revenue visibility close to 2.4 years or 2.4 times of FY16 revenue.
"We understand that the group is selectively bidding for new contracts involving Government’s infrastructure and building projects with our target orderbook replenishment of RM400 million for FY18."
Meanwhile, JF Apex Securities said it was optimistic looking at the group’s property development segment which now focuses on affordable homes where the current market appetite is.
The unbilled sales for the property segment is said to stand at RM164.7 million which renders revenue visibility over 0.95 times of FY16 property segmental revenue.
"The group has clinched total new sales of RM111.5 million during 9MFY17.
"Looking forward, we are positive that the group will be able to sustain its encouraging new sales in view of the favourable product mix offerings such as the launch of new phases of Laman View, Cyberjaya, consisting 469 units of PRIMA apartments with GDV of RM157 million and 194 double storey houses with GDV of RM173 million," JF Apex Securities said.
It pointed out that the residential development in Taman Putra Perdana, Puchong (GDV of RM160 million) is targeted to be launched in end of this year and the research house also looks favourably at Gadang Holdings' expansion plans for its power business to boost its recurring income.