GABUNGAN AQRS Bhd is likely to be supported by the momentum the property segment is gaining, as well as a sizeable order backlog, according to RHB Investment Bank.
“Gabungan AQRS’ earnings growth outlook until FY22F is likely to be supported by a sizeable order backlog and improving business environment,” said RHB.
The research house also noted that group management does not foresee any more impairments to be recognised for the remainder of 2020. This follows group earnings being hit by one-off impairments stemming from construction project budget revisions and liquidated ascertained damages.
“About RM19.2 mil in impairments were also recognised on completed property development inventories.”
“In light of the current economy that has been ravaged by Covid-19, we believe that Gabungan AQRS is prudent to buffer any downside risks to its business,” said RHB.
The research house noted that the group’s key projects, namely the Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) and Light Rapid Transit 3 (LRT3), are progressing well post-movement control order, with the pace reaching 85% of capacity.
“Both projects have received an extension of time from the government, with SUKE expected to achieve completion by next year. On another note, unbilled orders for LRT3 have now been finalised to RM452 mil from RM781 mil as of Dec 2019.”
“Based on the current progress rate, we understand that billings are expected to peak by 4Q21 or early FY22. As of June 2020, the group’s total unbilled orders stood at RM1.4 bil,” said RHB.
For the group’s property segment, RHB noted that the take-up rate for Gabungan AQRS’ units is showing momentum, with management positive on the outlook despite the general slowdown seen in the property market.
According to the research house, the bulk of the group’s property offerings is in the affordable range, comprising its E’Island Lake haven project in Putra Perdana, Selangor.
“It is worth noting that booked units for E’Island reached its high at 144 in August, from 69 in July, up more than 100% month-on-month (mom). Positively, this is an encouraging development for future sales,” said the research house.
RHB maintains its buy call on Gabungan AQRS, with a lower target price of RM1.12 from a previous RM1.19.
At the end of the morning’s trading, Gabungan AQRS’ shares were last done at 72.5 sen, up 3 sen, with 346,600 shares traded. – Sep 2, 2020
