Gabungan AQRS may see a rebound after falling to a low of 31.5 sen

Gabungan AQRS Bhd share price may see a rebound from its 5-month low of 31.5 sen on Aug 5. The counter was trading at its peak of 47.5 sen on July 23 but succumbed to profit taking. Over the past year, Gabungan AQRS slid some10.8% to close at 33 sen on Sept 6.

However, positive upward momentum is expected as investors are bullish on its financial performance. The contractor and property developer recorded a net profit of RM3.8 million in the Apr-Jun quarter.

This brings the company to achieve 18MFY24 bottomline of RM20.7 million. This are no comparison figures due to a change in financial year-end from 31 Dec to 30 June.

In addition, the company’s fundamentals are supported by an existing construction orderbook of RM472.2 million. It also has an unbilled property sales of RM942.8 million as of end-Jun 2024.

Consensus is forecasting the group to make net earnings of RM36 million in FY Jun 2025 and RM43.9 million in FY Jun 2026. This translates to prospective undemanding PERs of 5.2x and 4.3x, respectively with its 1-year rolling forward price earnings ratio.

Analysts are positive on Gabungan AQRS, maintaining a ‘buy’ call with a target price of 49 sen. The company’s 18MFY24 represents analysts’ 80.9% of their estimate, thus falling short of expectations.

The variance in our forecast was due to higher-than expected net operating expenditure, although revenue was inline at 98.9%. Nonetheless, analysts remain optimistic on the company’s long-term prospects, underpinned by its construction orderbook and unbilled property sales.

Although 18MFY24 net profit fell short of full-year estimates, analysts remain sanguine on the company’s earnings growth to be supported by its construction outstanding orderbook. This ensures sustained earnings and cash flow contributions through FY26.

Additionally, they anticipate improved contribution from its property division as the company concentrating on delivering vacant possession of E’Island Lake Haven. It is also accelerating construction activities for The Peak with new financing secured and initiating the first launch of Serena Gambang.

These three projects collectively represent a combined GDV of approximately RM1.3 billion which to reflect to its earnings in FY25-29. It is therefore an attractive investment prospects given its undemanding and attractive growth trajectory.