Gadang - remained healthy

Its construction order book remained healthy at rm1.18 billion. On the construction front, most of its construction projects will be coming to a tail end when the MRT project is completed in 2016 to 2017. Estimate construction revenue to make up 75% of FY2014 total revenue, with the bulk coming from the MRT project.

Currently (Jan 2014), the company has an outstanding construction order book of rm1.18 billion. Estimate that these construction jobs would contribute about 7% to its earnings.

The next key driver will be its project in Tampai, Johor. It had entered into a joint venture agreement with Capital City Project Sdn Bhd to co develop a site in Tampoi. Gadang will act merely as a landowner in this deal and in exchange it will receive rm57.5 million for the proposed land which will be re developed.

Gadang will also receive additional gross development while proceeds of up to rm324 million of the final GDV of rm1.8 billion, which translates into a net gain of about rm219.7 million or 73 sen per share.

Gadang could potentially recognize rm40 million yearly.

It has the potential to re rate upwards driven by strong earnings growth visibility and lucrative concessions that provide stable cash flows.