The recent announcement by Gabungan AQRS on its joint development with PR1MA Corporation Malaysia to develop and construct residential units in Kuantan bodes well with analysts.
The project will be over three phases on a 100.83-acre land with a gross development value (GDV) of the project at RM335.95m. It comprises 320 units of single-story terraced and single-story semi-detached in the first phase, 328 units in the second phase, and 417 units in the third phase. This is expected to be completed over 84 months or seven years. PR1MA has agreed to deliver vacant possession of the land to AQRS and to grant it the exclusive rights to develop the land. Once it is given the go-ahead, the project will further boost the group’s profile in construction and property development while contributing positively to its future financial performance.
Excluding this new development, AQRS’ order book currently stands at about RM1.0b, with earnings visibility up to FY24. About 73% of these projects are government-related, therefore risks of lower margins are avoidable as government jobs usually come with a variation of price (VOP). Earnings estimates. Kenaga is maintaining its earnings estimates, pending further clarity on the approval and commencement of the project.
Note that the commencement of the project is subject to and conditional upon fulfillment of conditions precedent within a 10-month period and PR1MA has the sole discretion of extending the approval period for a further three months. The research house is keeping the target price of RM0.52.
Overall the developer has a Buy call on its stock, as the analysts remain positive on the group’s earnings prospects, backed by its healthy order book and strong margin protection measures. AQRS could be among the Gabungan AQRS Berhad beneficiaries of mega infrastructure projects such as MRT3 and future mega projects to be introduced by the Government predicated on the Group’s extensive experience and involvement in projects such as MRT1, LRT3, SUKE, and upgrading works for several highways.
