Gabungan AQRS poised for rebound on potential job wins
According to RHB Research, the group could benefit from potential job wins linked to the reinstatement of five Light Rail Transit 3 stations, due to its prior experience working on the Shah Alam Stadium and Glenmarie stations.
It is also poised to gain from Phase 1B of the Pan Borneo Highway in Sabah, where its 49%-owned SEDCO Precast Sdn Bhd is a contender to supply precast components worth an estimated RM400mil to RM500mil.
The formation of new property joint ventures, such as the Serena Gambang project in Pahang, may further boost earnings.
RHB Research noted that, as of today, the group has an outstanding construction order book of RM335mil, which the research house described as 'reasonable at this juncture, as job awards have yet to pick up.'
Meanwhile, its Johor Baru development, The Peak, may gain traction due to its proximity to the Johor Baru–Singapore Rapid Transit System Link station.
The group has unbilled property sales of RM191mil.
In the third quarter of financial year ending June 30, 2025 (3Q25), Gabungan AQRS posted a net loss of RM7.88mil, or a basic loss per share of 1.45 sen.
This compared with a net profit of RM3.18mil, or a basic earnings per share of 0.58 sen, in the same quarter last year.
Revenue also dropped from RM66.96mil to RM41.08mil during the quarter.
For 9M25, the group recorded a net loss of RM16.13mil, compared to a net profit of RM16.91mil in the same period last year.
Revenue also dipped from RM376.05mil to RM151.31mil.
The negative deviation was due to a weaker-than-expected property division and higher-than-estimated sales costs.
While Gabungan AQRS' results missed the research house's forecasts, they exceeded street expectations, accounting for 56% and 115% of the respective full-year projections.
Following the results, RHB Research trimmed its FY25 to FY27 earnings forecasts by 14%, 10% and 13%, factoring in slower property revenue recognition and more conservative cost assumptions.
'We also take the opportunity to ascribe a lower target price-to-earnings (PE) (ratio) of eight times, as Gabungan AQRS' remaining orders have not been replenished at the same pace as that of peers,' it added.
Nonetheless, RHB Research maintained a 'buy' call on the group, with a revised target price of 33 sen.
'Given the plethora of catalysts and its track record in infrastructure projects like Mass Rapid Transit 1 and Sungai Besi-Ulu Klang Elevated Expressway, the stock remains undervalued relative to peers, trading more than two standard deviations below its five-year mean PE – which justifies our firm 'buy' call,' it added.
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