Gabungan AQRS says ECRL, Pan Borneo doesn't affect order book

KUALA LUMPUR (May 14): Gabungan AQRS Bhd, which saw its shares plummet 30% to RM1.12 ahead of noon break today, is unperturbed by the Pakatan Harapan government's plan to review mega infrastructure projects such as the East Coast Railway Link (ECRL).

“I think there’s a perception among investors that uncertainty over projects like the ECRL and Pan Borneo highway in Sabah will affect us. The reality is that those projects were never in our books anyway,” said Datuk Azizan Jaafar, Gabungan AQRS group CEO.

Speaking to theedgemarkets.com after the group’s annual general meeting here today, he emphasised that the group’s current order book of RM2.7 billion would give it earnings visibility over the next three years.

“On top of that, it is good for us that the new government is focusing on increasing transparency and local participation,” Azizan said, adding that Gabungan AQRS has proven itself with a track record of having secured projects through open tenders and lowering costs.

As such, there is no change to the group's tender book target of RM1.5 billion this year, Azizan said.

The construction and property development firm also saw its warrants plunge 77.3% to 7.5 sen this morning. 

However, Azizan believes the current share price weakness is a buying opportunity.

“Even a fund manager in Singapore told me he thinks the sell down is very unfair to us,” Azizan said, adding he himself will be “queueing” to buy the group’s shares, once the market re-opens at 2.00pm today. His private vehicle, Ganjaran Gembira Sdn Bhd, is AQRS’ largest shareholder with an 11.15% stake.

Gabungan AQRS reported a 2.1% uptick in net profit for its first quarter ended March 31, 2018 (1QFY18) to RM16.47 million, from RM16.14 million in the previous year's corresponding quarter, on higher cost efficiency.

This was despite a decline in quarterly revenue by 19.79% to RM127.49 million, from RM158.94 million a year ago, in the absence of land sales revenue amounting to RM90.4 million.

When asked if political shifts and uncertainty in the states in which it was operating, namely Pahang and Sabah, would affect its ongoing projects there, Azizan said its existing projects would be unaffected, as the group’s projects were awarded by the federal government.

Gabungan AQRS is involved in works for the Sungai Besi-Ulu Kelang (SUKE) highway and Light Rail Transit 3 (LRT3), in addition to building the Pusat Pentadbiran Sultan Ahmad Shah in Kuantan, Pahang and a mixed development called One Jesselton Waterfront in Sabah.

It also has an ongoing property development project in Johor Bahru. — theedgemarkets.com

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