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Quick take: Gadang rises on new RM100mil contract

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Quick take: Gadang rises on new RM100mil contract

KUALA LUMPUR: Shares in Gadang Holdings Bhd climbed in early trade Monday after securing a RM100.34mil subcontract works from Binary Vista Sdn Bhd.

The construction engineering company added 2.63%, or one sen to 39 sen at 9.10am. Year-to-date, it has fallen some 12.3%. Gadang-WB jumped 100%, or 0.5 sen to one sen.

Gadang said its wholly-owned subsidiary, Gadang Engineering (M) Sdn Bhd (GESB), has secured a RM100.34mil subcontract works for Central Spine Road Package 2 from Binary Vista.

It said GESB would be the subcontractor to undertake demolition, site clearance, earthwork and access bridge to Kuala Berang, Terengganu.

Gadang said the 30-month subcontract will be completed by the first quarter of 2024.

The group said the subcontract is expected to contribute positively to its earnings and net assets for the financial year ending May 31, 2022 and the remaining duration of the subcontract.

TA Securities Research is positive on the news as Gadang finally ended its contract drought as this is the first job win by the group in FY22.

“The previous major job win for the group was the RM81.2mil work package for sections 5 and 6 of East Coast Rail Link, which was secured about 1.5 years ago,” it said.

TA Securities said assuming a gross margin of 10%, the project is estimated to generate RM4mil of net earnings throughout the construction period

“With this new job win, Gadang’s outstanding order book is estimated at RM525mil, translating into 1.4x FY21 construction revenue,” it said, adding that it has maintained its sell call on the stock and target price of 31 sen.



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