• Maintain BUY (TP: RM0.49). Gabungan AQRS (AQRS) posted an 18MFY24 PATAMI of RM20.7mn, representing 80.9% of our estimate, thus falling short of expectations. The variance in our forecast was due to higher-thanexpected net OPEX, although revenue was inline at 98.9%. Nonetheless, we remain optimistic on the company’s long-term prospects, underpinned by its construction orderbook of RM472.2mn and unbilled property sales of RM216.9mn. We maintain our BUY call for AQRS, with TP of RM0.49, pegged at 9.0x PER to FY25F EPS of 5.4sen

• Key highlights. On QoQ basis, revenue declined by 16.8% mainly due to adjustments in the property development division's revenue, attributed to the recognition of additional costs of RM11mn related to the E’Island Lake Haven project. However, core net profit (excluding LAD of RM7.1mn) grew by 20.2% due to lower effective tax rate, which contracted by 46.6ppts to 2.7% in 6QFY24 from 49.3% in 5QFY24. The decrease in the effective tax rate had eventually offset the impact of lower revenue and higher net OPEX during the quarter.

• Earnings Revision. No changes.

• Outlook. Although 18MFY24 PATAMI fell short of our full-year estimates, we remain sanguine on the company’s earnings growth to be supported by its construction outstanding orderbook of RM472.2mn, ensuring sustained earnings and cash flow contributions through FY26. Additionally, we anticipate for improved contribution from its property division as the company concentrating on delivering vacant possession of E’Island Lake Haven, accelerating construction activities for The Peak with new financing secured and initiating the first launch of Serena Gambang. These three projects collectively represent a combined GDV of approximately RM1.3bn which to reflect to its earnings in FY25-29.

Source: BIMB Securities Research - 30 Aug 2024