This article first appeared in The Edge Financial Daily on November 18, 2019
GDB Holdings Bhd
(Nov 15, 43.5 sen)
Maintain buy with a higher target price (TP) of 54 sen: GDB Geotechnics Sdn Bhd (formerly known as Eco Geotechnics Sdn Bhd), a recently acquired 70%-owned subsidiary of GDB Holdings Bhd, has accepted a letter of award and supplementary agreement to undertake piling and substructure works for the proposed development of Aviary Residence, which comprises two blocks of serviced apartments, a podium and a six-storey car park in Petaling, Selangor. The employer, Bison Holdings Sdn Bhd, is a wholly-owned subsidiary of Hua Yang Bhd.
The contract, which shall commence today and has a duration of 21 months, carries a contract value of RM20.67 million. Pursuant to the terms of the contract, the employer has the right to terminate the contract after completion of three numbers of bored pile testing at an agreed cost of RM800,000.
This is the fourth construction job secured by GDB in 2019, bringing the total order book replenishment year to date (YTD) to RM886 million.
The outstanding order book is estimated at RM1.2 billion, translating into 4.4 times financial year 2018 (FY18) revenue. This would provide strong earnings visibility to the group for the next three years.
Following the job win, we raise our FY19 order book replenishment assumption from RM865 million to RM886 million, to reflect the likely total job win in 2019.
Assuming a gross margin of 10% and after the revision in FY19 order book replenishment assumption, earnings forecasts for FY20 and FY21 are raised marginally by 1.3% and 1% respectively. — TA Securities, Nov 15