SJ Securities maintains ‘overweight’ call on Widad Group

KUALA LUMPUR: Widad Group Bhd’s prospects look rosy after it is thrust into the limelight following a proposal to take over PLUS Malaysia Bhd, said SJ Securities Sdn Bhd.

Parent Widad Business Group Sdn Bhd had on Oct 30 resubmitted its proposal to take over PLUS Malaysia for RM5.3 billion.

SJ Securities said in a report Widad’s offer represented a total enterprise value of RM38.34 billion, making it the most attractive offer so far.

“We reckon that such a major takeover proposal by Widad’s parent company signifies the group’s ability to take on major endeavours, which will likely benefit Widad in the form of related party transactions.

“However, we do not discount the possibility of margin compression involving a steep learning curve in technological advancement.”

SJ Securities said Widad had the expertise in construction and integrated facility management to provide comprehensive solutions to its customers.

Widad had on Oct 17 entered into a heads of agreement with Serendah Heights Sdn Bhd for the proposed acquisition of a 90 per cent stake for RM95.9 million.

Serendah’s unit YBK Usahasama Sdn Bhd has a concession to develop the facilities and maintain the Universiti Teknologi Mara campus in Jasin.

The deal will boost Widad’s order book to RM1.8 billion and provide further visibility to the company’s long-term earnings and diversification.

SJ Securities has kept its “overweight” stance on Widad, with a target price of 56 sen.