The crystallisation of LRT3, Pan Borneo Highway and One Jesselton projects are expected by analysts to increase Gabungan AQRS Bhd's (Gabungan AQRS) earnings in the first quarter of financial year ended 2018 (1QFYE18).
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) noted that for the 12 months ended FY17 (12MFY17), its construction segment contributed to 77 percent of revenue - a direct result of Gabungan AQRS' higher construction activities.
"Moving forward, we reckon the crystallisation of projects such as LRT3, Pan Borneo and One Jesselton projects will increase earnings in 1QFYE18" MIDF Research said.
On estimates, MIDF Research made no changes to its forecast for FYE18-FYE19 on the back of a sturdy order book of RM2.77 billion.
The research arm reckoned that once the One Jesselton in Kota Kinabalu project commences, the PATAMI margin of 10.2 percent will be expanded to circa 11 percent as a result of economies of scale.
"The start of East Coast Railway Line is also positive for Gabungan AQRS as it will potentially bring a flurry of civil and infrastructure packages.â€
All in, MIDF Research maintained its â€˜buy' recommendation with a target price of RM2.30 per share based on discounted cash flow (DCF) valuation.