KUALA LUMPUR (Jan 23): The share price of Gadang Holdings Bhd (KL:GADANG) may rally on the back of strong earnings growth, following a better-than-expected quarter, TA Securities said.
TA Securities, the sole research house covering Gadang, upgraded its recommendation for the stock to ‘buy’ from ‘sell’. The house also lifted its target price to 42 sen, implying a potential gain of nearly 24% in the next 12 months from the last price.
“The property division is expected to remain a key contributor, driven by attractive sales incentives and an aggressive pricing strategy,” the house said.
On Wednesday, Gadang reported a net profit of RM13.37 million for the first half ended Nov 30, 2024 (1HFY2025), thanks to cost control measures that helped to boost margins. After stripping out one-off gains, net profit for the period was RM6.9 million, accounting for 60% of estimated full-year earnings.
Gadang will likely make a net profit of RM13.3 million for the financial year ending May 31, 2025 (FY2025), according to TA Securities, after raising its estimate by 15%.
The house also raised its forecasts by 5% for FY2026 and by 4% for FY2027, noting that margin assumptions for certain ongoing construction projects had been revised higher.
The company has RM1 billion worth of construction jobs on hand, which will keep it busy for at least another two years. On its part, Gadang said it is actively seeking more opportunities in the infrastructure, renewable energy and data centre sectors.
Unbilled property sales meanwhile amounted to RM329 million. For the utilities segment, the company said the construction of a solar power plant in Tawau, Sabah generating up to 5.9 megawatts is in the final stage of completion.
Coupled with the recent successful bid for another 15-megawatt solar farm in Tawau, “both energy-generating facilities will further strengthen the revenue contribution to the group in the future years upon commissioning”, Gadang added.
At the time of writing on Thursday, Gadang shares were unchanged at 34 sen, giving the company a market capitalisation of RM268.29 million.