Gabungan AQRS attributes share price fall to sentiment

PETALING JAYA: Gabungan AQRS Bhd’s share price, which has been declining since the cancellation of the East Coast Railway Link (ECRL) in August, continued to slide yesterday, with its group CEO Datuk Azizan Jaafar stating that it is a victim of negative sentiment more than anything.

Despite the project not included in its order book, Prime Minister Tun Dr Mahathir Mohamad’s announcement on Aug 21, that it would be scrapped due to high cost saw tits share price fell 10% in a day to RM1.23 and continued to decline to RM1.11 on Aug 28.

The stock fell further yesterday, closing 0.90% or 1 sen lower at RM1.10 with 1.05 million shares done. It traded at a high of RM1.14 yesterday.

Azizan remains unperturbed and expects the group to perform better for the remaining part of 2018 and 2019, with construction, property development and precast component manufacturing driving its earnings.

Speaking to reporters at its EGM yesterday, he said the construction order book of RM2.4 billion will sustain the group for the next three years while the property division will begin contributing to its earnings next year.

“For the E’Island Residence project, almost 60% of the units are priced from RM350,000 to RM370,000…as of yesterday (Tuesday), we have 723 registered buyers despite our low profile,” he said.

Located in Puchong, the project has a gross development value of RM490 million and will be launched in December. The project offers a total of 1,140 units.

Azizan said he does not expect buyers to face any loan issues as most banks are keen to provide mortgages for the project, as most of the units are priced below RM400,000.

In addition, the unsold units of The Peak in Johor Baru will be released in phases over the next few years, further boosting the group’s earnings.

As for the precast component manufacturing division, Azizan said the return on investment will be high as it only spent RM3 million with no borrowings to repay.

Gabungan AQRS undertakes the precast component manufacturing division via SEDCO Precast Sdn Bhd in Sabah, which is a partnership with the Sabah Economic Development Corp (SEDC). The group holds a 49% stake while SEDC holds the remaining 51%.

The precast plant, which is already in operations, has the capacity to supply products that will be required for the Pan Borneo Highway project.

Meanwhile, Azizan said the group is on a stronger footing post-transformation and is better positioned to face the changes that the country is currently going through.

He said the group is more efficient and competitive today, with better margins compared with its peers while operating cost has been declining from over 20% in 2015 to 15% in 2016 and 12% last year.

“For the first half of 2018, the total finance cost was only RM3.5 million. Last year, it was about RM12 million. We have halved it,” he said.