Gagasan Nadi ends flattish after strong start on debut day

KUALA LUMPUR (Jan 9): It appears that a less optimistic sentiment in the broader market has weighed on Gagasan Nadi Cergas Bhd’s debut.

The construction player’s shares jumped as much as 33% of the start of its maiden trading day on the ACE Market yesterday to 40 sen apiece — compared with its initial public offering (IPO) price of 30 sen — which pleased its managing director Wan Azman Wan Kamal, who said it was commendable given the lacklustre construction market now.

But the stock later pared almost all its gains to settle at 30.5 sen as the benchmark FBM KLCI dipped 6.41 points or 0.38% to close at 1,672.76 points. The counter was nevertheless the most actively traded stock on Bursa Malaysia after 118.6 million shares were exchanged. At 30.5 sen a share, the group has a market capitalisation of RM229.7 million.

The group’s IPO entails a public issue of 140 million new shares, with an offer for sale of 60 million existing shares. The IPO has been well-received, with its public tranche oversubscribed by 20.2 times prior to the listing.

“Going forward, we remain positive on the Malaysian construction sector outlook and believe there are many more projects, such as education institutions, affordable housing and medical centres, to be built in the near future.

“Leveraging on our long track record and management team experience, we believe our listing today (yesterday) places us in a good position to support these nation-building initiatives,” said Wan Azman.

Wan Azman also highlighted that the country is facing a shortage of affordable housing, and that a lot more affordable housing projects are in the offing, with up to 200,000 units to be built under the 11th Malaysia Plan.

As such, Wan Azman is hopeful that Gagasan Nadi will secure more of such projects from the government.

On Monday, the company announced that it had bagged a construction contract worth of RM109.99 million from Putrajaya Homes Sdn Bhd to build two blocks of public residential apartments in Precinct 11, Putrajaya.

The 34-month contract entails the construction of 463 apartment units, a three-storey multilevel car park, community facilities, and the upgrading of part of the designated green area and buffer zone.

With the latest contract win, the group’s order book has been boosted to RM710 million, which provides earnings visibility up to 2022. The group’s outstanding orders comprise the Rumah Selangorku projects in Putra Heights and Bukit Raja, 1Malaysia People’s Housing Programme in Pasir Mas, Kelantan, a cardiology centre for Hospital Serdang and Maktab Rendah Sains Mara in Bagan Datuk, Perak.

Gagasan Nadi has raised RM60 million from its IPO. Of the total proceeds raised, RM14 million will be allocated for funding of the Asean Football Federation mixed development, RM6.5 million for capital expenditure under the Datum Jelatek development and RM16.5 million as working capital.

Going forward, Wan Azman said, the company will continue to prioritise government projects. Its new listing status will also enable it to participate in bigger projects in the future, he noted.

Backed by its record of over 20 years in completing sizeable projects across Malaysia, with a core specialisation in design and build, the group is optimistic about its growth prospects on the back of sustained nation-building opportunities in the construction sector.

According to the group, it is registered with Pusat Khidmat Kontraktor and the Construction Industry Development Board as a Grade G7 contractor, which allows the group to tender for projects with unlimited values as well as bumiputera-allocated projects.

This article first appeared in The Edge Financial Daily, on Jan 9, 2019.

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