GDB makes lukewarm debut on ACE market

KUALA LUMPUR: Construction player GDB Holdings Bhd which saw a 2.5 sen or 7.1% discount on its first trading day on the ACE Market of Bursa Malaysia, is banking on projects on its current orderbook for an increased revenue contribution.
The counter opened at 36 sen, which was a one sen premium to its issue price of 35 sen. However, it closed lower at 32.5 sen on heightened selling pressure, with some 42.33 million shares changing hands.
The group’s managing director Cheah Ham Cheia said based on its current orderbook value, which stood at RM854.9 million as at Feb 6, the group could recognise a revenue contribution of RM400 million and RM440 million for 2018 and 2019 respectively.
Its orderbook comprises projects such as Westside 3 in Desa Park City, Etiqa Office Tower ain Jalan Bangsar, AIRA Residence in Damansara Heights and Menara Hap Seng 3 within the Kuala Lumpur city centre.
Having tendered for projects worth over a billion, it is looking at a success rate of 15-20% in securing projects from its tenderbook.
The group registered a net profit of RM22.52 million for the financial year ended Dec 31, 2017, which is 39.9% higher than the previous year’s RM16.09 million. Revenue for the period, on the other hand, grew 7.2% to RM296.81 million from RM276.91 million.
Cheah added that the ability to keep material costs low and finishing projects ahead of schedule are cost-saving measures, which in turn has contributed to profit.
“For all tenders we participated we’ve always built in a buffer which allows fluctuation in our costing, if that doesn’t happen, that means it contributes extra profit, this is what happened in the last few years. We always have a buffer, we don’t tender based on current price,” he said.
On the recent freeze on luxury residential and commercial properties, Cheah said that there is no waning in orders from developers.
“Even now we see a lot of indications from developers until we have to turn down quite a number of them. I think land in KL is getting more expensive and the only way to make it affordable is to build higher and higher and this is where our expertise come into play,” he said.
From what we are facing now, we have more than enough tenders to participate in,” he added.
The construction player, which currently focuses on the construction of high rise residential, commercial and mixed development projects, is looking to set up an infrastructure project team within a year.
GDB has set its sight on highway and marine works which includes jetty and wharf projects as potential future ventures for the infrastructure segment.
GDB’s initial public offering entails the issuance of 125 million new shares, of which 12.5 million shares were made available for the Malaysian public.
A bulk of the RM43.8 million raised in proceeds, amounting to RM24.7 million, will be deployed for capital expenditure purposes. Meanwhile, RM15.6 million will be used for working capital and RM3.5 million will be used to defray listing expenses.
Rakuten Trade said it likes GDB’s project partner delivery style of fast builder where it could take on bigger specialised construction jobs as evidenced in securing large value high-rise contracts. It has completed four major projects totaling RM645 million since it was founded in 2013.
“Net profit margins remain commendable at 7% that is higher than peers, while earnings per share growth continues to be double-digit of approximately 20% for FY18 and FY19.”