[Gamuda (5398) - A Leading Infrastructure Industry Company]

AGM details

Financial Report Update:
Gamuda business distribution:

1) Construction-
Turnover (+ 2%), Profit Before Tax (-23%), Contribution 32% Profit Before Tax
2) Real Estate-
Turnover (-1%), Profit Before Tax (+ 22%), Contribute 35% Profit Before Tax
3) Shuihe Avenue –
Turnover (-3%), Profit Before Tax (-28%), Contribute 33% Profit Before Tax

Although the MRT2 project has shrunk, the turnover remains at RM 7.2bil. Core profit (net of one-time impairment) was RM 706mil (-15%). Core pre-tax profit fell by 14% to RM 909mil.

Dividend: 12 sen

✅ Project progress: KVMRT2, SSP Line

-This project was converted into a Single Turnkey Contract. Although the turnover was guaranteed to be consistent, the profit fell by 23%. It is currently 60% complete and will be completed in 2022.

Gamuda IBS
-The second IBS plant was officially launched in May 2019. Two IBS plants can build 10,000 houses a year.

Pan Borneo Sarawak
-The project has been completed by 45% and will be completed by 2021.

4 Avenues
-This is at the final stage, pending to sign contract. After the avenue was sold, only Gamuda Water remained in the franchise business.

Singapore
– Anchorvale Crescent Real Estate -It will be launched next year.

✅ OrderBook：
KVMRT2 – RM 7.7b
Pan Borneo – RM0.4b
Taiwan & Other – RM 1.1b

Q&A Time:

✅ Q: Gamuda has sold 4 avenues (KESAS, LDP, SPRINT & SMART), and the company has also obtained the Penang Transport Master Plan (PTMP) and Penang South Islands projects. How much money did these 4 avenues sell, and how much will they invest in Penang?

A: The selling price is RM 2.36bil, a part of which will be used to pay dividends. Most of the rest will be used for PTMP and Australia projects.

✅ Q: Will Toll's earnings continue to be sustained in the future?

A: PTMP includes LRT, Pan Island Link (PIL) and Penang South Island Reclamation. The LRT & PIL budget is RM 20bil, and the reclamation project is RM 10bil. We are Project Delivery Partner (PDP), so we can earn PDP Fee. This contract is expected to be signed in Jan 2020. In Australia, we will bid for projects over AUD 20bil next year. These projects will provide Gamuda with considerable revenue.

✅ Q: What is the latest sell-through rate for a 661 Chapel Street condominium in Melbourne, Australia?

A: We have a total of 116 and sold 65. Sell-through rate 55%

✅ Q: What are the company's challenges in Australia? How does the company address these challenges?

A: Gamuda will quickly deal with unfamiliar business areas. Local companies in Australia lack the experience of large infrastructure and staff with lack of experienced. Gamuda has extensive experience in this area, and the experienced we had will be used in Australia

✅ Q: Why did the company choose to cooperate with Martinus Rail Pty Ltd in Australia?

A: Martinus Rail (MR) gave Gamuda immediate access to the Australian market. They also had local employees and their own supply chain. They have extensive rail operations and have also done rail projects in New South Wales, Victoria and Queensland. In addition, we have joint ventures with other large companies to bid for large-scale infrastructure projects.

✅ Q: How much value are you expected to bid for in Australia?

A: Expected to exceed AUD 20bil

✅ Q: What is the goal to make profit?

A: Earnings vary from project to project. Can achieve high single digit profit.

✅ Q: How much does the company plan to spend on technological innovation, automation and electronics?

A: FY2017-FY2019 used RM 253mil, FY2020-FY2022 estimated RM 145mil

✅ Q: How much profit does PTMP make? How to avoid this project to become Turnkey Project?

A: 6% profit. Turnkey Project has both good and bad. Advantage is that the Government has given a sum of money, and if we can save it, we will earn more profit.

✅ Q: How much dividend does the company intend to give?

A: We haven't confirmed yet, we will announce it after confirmation.

We know that PTMP has three projects. These projects have a total of Rm 30bil and a profit of about 6%. This whole process takes about 8-9 years. The company will focus on Australian business. At of now, it has cooperated with local companies to bid for the AUD 20bil project, and the win rate is about 20%.

Gamuda is having a great advantage over in Australia, as we have extensive engineering experienced, where Australia do not have much engineers having this kind of experience.

At of now, the company has large-scale infrastructure projects in Australia, and everything is just in the bidding process. Therefore, these earnings will not be reflecting soon, and we may see the growth on the following year. After the company sells 4 highways, it will take a portion to provide Special Dividend, but we are not confirm yet on the date.

The Dividend policy is 60% profitable and the company will implement a Dividend reinvestment plan.

Louis Yap

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