GDB has proposed a private placement of 93.8m new shares, representing 10% of its existing share base. At an issue price of RM0.419 per share, the placement is expected to raise gross proceeds of RM39.3m to fund the Group’s working capital requirements for upcoming infrastructure-related projects and ongoing developments.
We are Neutral on the proposed placement, which strengthens GDB’s financial position but dilutes FY26F EPS by c.9%. Despite limited need for new funding given its debt-free RM81.1m net cash, the move aligns with its long-term infrastructure expansion plan.
We have raised our FY26F CNP by 1%, reflecting higher interest income from the enlarged cash balance following the proposed private placement.
Maintain our BUY recommendation with a lower TP of RM0.53 (from RM0.58 previously), based on 8.0x FY26F EPS of 6.6 sen.
Proposed Placement. GDB has proposed a private placement of 93.8m new shares, representing 10% of its existing share base, to Dato’ Sri Chan Leng Sam and Dato’ Sri Voon Thien Loong at an issue price of RM0.419 per share, raising total proceeds of RM39.3m. The funds will be utilised for working capital to support upcoming infrastructure-related projects and ongoing developments, including Metrohub 4 (Klang), Logistics Hub Plot B (Shah Alam), and KL International Hospital (Bukit Jalil). A portion of the proceeds will also cover fees and expenses related to the placement exercise (Table 1). The placement is targeted for completion by 4QCY25.
Our Take. We maintain a Neutral view on the proposed placement. While the exercise will strengthen GDB’s financial position by boosting its cash reserves, it will also result in an estimated c.9% dilution to our FY26F EPS, lowering our fair value to RM0.53 (from RM0.58) on a fully diluted basis. We see limited necessity for additional fund-raising, given GDB’s healthy balance sheet, being debt-free with RM81.1m net cash as of FY24, which we deem sufficient to fund working capital and upcoming projects. Nonetheless, we view the placement as a strategic move consistent with management’s long-term expansion into infrastructure projects, which could materialise earlier than anticipated.
Prospects Remain Intact. GDB’s orderbook of RM1.0bn (3.8x FY24 revenue) remains solid, anchored by three ongoing projects that provide earnings visibility through FY26. The Group plans to submit approximately RM2.0bn worth of new tenders by 4QFY25, primarily in the warehouse (44.7%), residential (16.6%), commercial (12.6%), and mixed-use (26.1%) segments, potentially expanding its tenderbook to around RM5.0bn. Assuming a 15% win rate for FY25F–FY26F, we estimate annual contract wins of roughly RM705m, supporting steady orderbook replenishment and sustaining medium-term earnings visibility.
Earnings Revision. We have raised our FY26F core net profit (CNP) by 1%, reflecting higher interest income from the enlarged cash balance following the proposed private placement, while maintaining our FY25F earnings forecasts unchanged.
Valuation & Recommendation. Factoring in the dilution from the proposed private placement, we maintain our BUY call with a lower TP of RM0.53 (from RM0.58 previously), based on 8.0x FY26F EPS of 6.6 sen, supported by a three-star ESG rating. We remain positive on GDB’s prospects, underpinned by (i) three major projects in its RM1bn orderbook entering peak revenue recognition phases, (ii) potential new contract wins from a sizable tenderbook, expected to reach c.RM5bn by year-end; and (iii) long-term expansion plans into infrastructure construction services.
Risks. Rising material prices, failure to secure new contracts, and risk of Liquidated Ascertained Damages (LAD).
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Currency | Buy Rates (RM) | Sell Rates (RM) |
---|---|---|
USD | 4.212894 | 4.246402 |
EUR | 4.925348 | 4.934954 |
CNY | 0.592662 | 0.593823 |
HKD | 0.542079 | 0.546393 |
SGD | 3.250847 | 3.276896 |