KUALA LUMPUR: AmInvestment Research is maintaining its Buy call on Gamuda Bhdwith a sum-of-parts based fair value of RM5.60 while it sees the company as the best proxy to the booming construction sector in Malaysia.
“Gamuda's 1QFY17 results met expectations at 24% and 23% of our full-year forecast and consensus estimate respectively. Overall, its 1QFY17 net profit inched up 1% on-year as Mass Rapid Transit Line One (MRT1) was at the tail-end while MRT2 had yet to start contributing,” it said.
AmInvestment Research said Gamuda hopes to secure contracts worth RM3bil to RM4bil from Gemas-Johor Bahru double tracking, Pan Borneo Sabah Highway and LRT3 over the next 12 months.
“It is equally bullish on the outlook for the local construction sector over the next three years, backed by KL-Singapore high-speed rail, MRT3, Penang Transport Master Plan (PTMP) and East Coast Rail Link,” said the research house.
It also said its forecasts assume Gamuda to secure RM2bil new jobs annually in FY17F and FY18F.
On Gamuda’s 1QFY17 property sales, they jumped 59% on-year to RM430mil due largely to positive performance of Vietnam (which made up about 40% of total sales, with the balance 60% coming from Malaysia).
The company reiterated its property sales target of RM2.12bil in FY17 (37%, 31%, 28%, and 4% from Malaysia, Vietnam, Singapore and Australia respectively), which is comparable to RM2.05bil achieved in FY16.
As at end-1QFY17, unbilled sales were RM1.9bil, up from RM1.2bil three months ago.
“For PTMP, Gamuda has already submitted its plan for the George Town-Bayan Lepas LRT line to Land Transport Commission (SPAD). It hopes to complete the environmental and social impact assessment studies for submission to the Department of Environment by Jan 2017. It expects approvals from 2H2017,” it said.
AmInvestment Research said Gamuda has a dominant role in MRT (as the project delivery partner (PDP) and tunneling contractor) and its involvement in Pan Borneo Highway.
“Gamuda has booked itself a ticket to ride on the next infrastructure/property boom in Penang via its PDP role in PTMP - an initiative by the Penang State Government to improve the road network and public transport system in Penang Island/Seberang Prai, to be funded with reclaimed land and rights to reclaim land,” it said.
