By DASHVEENJIT KAUR
GDB Holdings Bhd, en route to list on the ACE Market on March 27, saw the public portion of its initial public offering (IPO) oversubscribed by 43 times.
The company received a total of 8,551 applications for 549.3 million shares worth a total RM192.3 million for its public tranche totalling 12.5 million shares, a statement yesterday noted.
Inter-Pacific Research Sdn Bhd has valued GDB at 38 sen, a potential upside of 8.6% from the IPO price of 35 sen, as the construction company has a proven track record on delivery schedule, quality and safety.
GDB’s IPO entails the issuance of 125 million new shares at 35 sen per share.
Inter-Pacific likes GDB for its strong balance sheet, net cash position and management’s plan to formally adopt a dividend policy. The company has a solid earnings uptrend backed by a solid orderbook.
In its prospectus, GDB announced it intends to adopt a dividend policy of distributing up to 30% of annual net profit as dividends.
Inter-Pacific derived its fair value based on a forecast financial year 2018 (FY18) earnings per share of 3.8 sen pegged to a 10 times price-earnings ratio (PER).
“Our forecast places an earnings growth for FY18 and FY19 at 5.9% and 2.6% respectively.
“We compare GDB against similar local construction industry peers and have given it a discount in PER terms due to the smaller market capitalisation of GDB against the other construction firms,” it added.
GDB’s revenues are divisible into three segments namely the residential, commercial and mixed-development segments.
GDB has completed projects like One Central Park Project, Bukit Bintang City Centre Project, KL Eco City Project 1 and KL Eco City Project 2.
GDB’s reliance on major customers are seen as one of the investment risks by Inter-Pacific.
“To date, the group’s revenue was mainly contributed by Perdana Park- City Sdn Bhd, Trans Resources Corp Sdn Bhd and Etiqa Insurance Bhd, representing more than 95% of the group’s total revenue for the past few financial years.
“Moving forward, we expect the above companies to continue to contribute a significant portion to GDB’s revenue as it has another two projects in-progress from Perdana ParkCity and Etiqa Insurance,” it added.
GDB has secured an outstanding orderbook of RM854.9 million to date that will form the group’s activity base until FY20.