$GADANG / 9261 (GADANG HOLDINGS BHD)

-Gadang has a robust orderbook of approximately MYR1.1 billion as of May 2024, offering an orderbook/revenue cover ratio of 4x based on FY24 construction revenue.
-The company is well-positioned to secure more public infrastructure projects, leveraging its past experience with government-related projects such as hospitals, railways, and highways.
-The group's tenderbook, worth MYR2-3 billion, primarily focuses on infrastructure, with an estimated success rate of 20-25%.

Valuation Methodology:

-Gadang's construction arm is valued by comparing it to larger construction peers like Gamuda, IJM Corp, Sunway Construction, and Gabungan AQRS. A 40% small-cap discount is applied to reflect Gadang's smaller market capitalization.
-The property segment is valued with a 65% discount to RNAV, while the utilities arm (including water supply, mini hydropower, and solar photovoltaic) is valued using a discounted cash flow (DCF) approach with an 11.5% WACC.

Key Risks:

Potential risks include slow job replenishment, unexpected fluctuations in building material prices, and sudden labor shortages.