Strong Order Book Lifts GDB

GDB Holdings Bhd, which posted a 54% year-on-year jump in net profit for the first quarter (Q1), may see earnings visibility over the next few years due to its strong order book.

The construction group is also looking at securing RM500mil worth of new jobs this year to propel its growth further.

Currently, GDB has an outstanding order book of RM1.9bil as of end-March 2021, translating into a strong cover ratio of 5.2 times over the financial year 2020 (FY20) revenue, said TA Securities, which is maintaining a “buy” call on the stock.

“This could provide earnings visibility to the group for the next three years.

GDB posted a 54% year-on-year jump in net profit to RM8.8mil for the first quarter ended March 31,2021 while revenue was 11.23% higher at RM111.1mil, mainly due to higher execution of works for certain projects and contributions from the newly-secured 8 Conlay project.

In the same quarter last year, the group saw lower revenue, as no construction activities were allowed under a movement control order which had started from March 18,2020.

Its balance sheet remains solid with zero debt and a net cash position of RM74.2mil.

The company has proposed to undertake a bonus issue of new ordinary shares on the basis of one bonus share for every two existing GDB shares.

In addition, the group has also proposed to undertake a bonus issue of free five-year warrants on the basis of two warrants for every five existing shares held by shareholders on the same entitlement date to be determined later.

GDB’s one-for-two bonus issue of shares would result in the issuance of 312.5 million new shares and increase the group’s share base from 625.0 million shares to 937.5 million. The group’s share capital would remain unchanged at RM62.6mil.

Assuming the full exercise of warrants, GDB said the bonus issue of warrants would result in the issuance of 250.0 million new shares in GDB, and further increase the group’s share base to 1,187.5 million.

Its share capital would expand to RM197.6mil.

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