Gadang Holdings (GADG MK, BUY, TP: MYR3.10)
Sustainable Earnings For FY17
Results Review
Gadang is our small-cap Top Pick in the construction sector. We think that its valuations remain undemanding despite its strong earnings visibility. The stock currently trades at about 6x forward P/E for FY17F, which is below our benchmark 1-year forward target P/E for small- and mid-cap construction stocks. We maintain our BUY call at a higher SOP-derived MYR3.10 TP (from MYR2.85, 33% upside) following our earnings revision. The company has proposed a first and final single-tier dividend of 7 sen for FY16.
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