PETALING JAYA: Gabungan AQRS Bhd
’s outlook remains resilient as the group will be busy with its ongoing projects in the coming years, well buffered by the downside risks from the public infrastructure space, says RHB Research.
Post-visit to Gabungan AQRS’ light rail transit three (LRT3) project site, the research house said it came away feeling positive in its outlook for the construction and engineering group.
The key earnings drivers post-LRT3 for Gabungan AQRS include the possible formation of new property development joint-ventures (JVs).
Also on the list is the potential introduction of Johor’s own Malaysia My Second Home scheme, which may underpin unit sales of the group’s property project in Johor, The Peak, with an estimated gross development value (GDV) of RM603mil, said RHB Research in its latest report.
As at end December 2022, Gabungan AQRS’ progress for LRT3 was about 75%, targeted for completion by the fourth quarter of 2023.
“The LRT3 project is estimated to contribute some RM82mil in net operating cash flow until financial year 2025 (FY25), excluding any potential reinstatement works for the Temasya station, which could bring a total job value of RM100mil to RM200mil for Gabungan AQRS to its outstanding order book of RM956mil as at end-FY22,” it added.
Meanwhile, RHB Research said Gabungan AQRS had submitted variations of price claims for its infrastructure projects totalling RM22mil. “It is also submitting claims for additional costs incurred during the various movement control orders.
“Positively, these costs have already been incurred and recognised, and any successful claims should directly contribute to earnings,” the research house said in its report yesterday.
Last year, Gabungan AQRS was also successful in receiving a total of RM26mil in loss and expense claims for its PR1MA Gambang project.
Subsequently, it entered a JV agreement with PR1MA Corp Malaysia to be a developer of a 100-acre landed township, with an estimated GDV of RM336mil. RHB Research has maintained a “buy” call on the stock with a target price of 46 sen.
It noted an upcoming catalyst for Gabungan AQRS is the Pan Borneo Highway (PBH) Sabah project that may benefit its 49%-owned precast business, Sedco Precast Sdn Bhd.
“Contracts to supply precast components to PBH Sabah are valued at an estimated range of RM400mil-RM500mil,” said RHB Research.
Another catalyst for the stock is the formation of new property development JVs.
However, the downside risks include a slowdown in the property market and an unexpected shortage of manpower.
