- Maintain BUY on Gamuda with an unchanged fair value of RM5.38/share, based on a 5% discount to its Sum-Of-Parts (SOP) value. Stripping off provisions for tribunal awards in relation to the STORM tunnel and Dukhan Highway in 3QFY13, the group would have made a core net profit of RM487mil or a 20% growth YoY for 9MFY13.

- This was in-line with expectations, constituting ~79% of our full year core net profit estimates of RM614mil. Gamuda declared a second interim DPS of 6 sen, taking 9MFY13 DPS to 12 sen – similar to last year.

- Core construction pre-tax profits surged 28% YoY (+31% QoQ) on faster work progress at the Sg.Buloh-Kajang (SBK) MRT. The PDP and underground portions are now 8% and 14% completed as at 3QFY13 vs 6% and 8% in 2QFY13. Outstanding orderbook stood at RM3.9bil.

- Property earnings rose 26% YoY on stable pre-tax margins (~26%), as contributions for 9MFY12 included lumpy land sales gains for the Celadon City project in Vietnam.

- Looking into FY14F, management is still guiding for the second MRT line to be approved by 3Q13. Similar to the SBK line, the group is firmly committed to garner the dual role as both PDP and tunnelling contractor.

- Gamuda remains upbeat on the property market; Johorcontinues to be strong while the group is seeing a return in buying interest in the Klang Valley post-election. The group has thus revised upwards its FY13F new property sales target by 15% to RM1.6bil, with a new growth target of 6% from a decline of 8% previously.

- 9MFY13 new sales came to RM1bil as at April 2013 – with robust sales from its Horizon Hills project in Johor offsetting the weak Vietnamese property market.

- Gamuda has moved quickly to acquire two strategic parcels of land in Rawang;- Serai (724 acres) and Kundang (89 acres) for RM18psf and RM12psf respectively or a combined RM620mil (GDV: RM5.3bil).

- The former (Serai) enjoys direct accessibility to the North South Expressway once a new interchange is completed in August. It is also located 2.5km from the Kuang KTM Commuter station that is one stop away from the new Sg.Buloh station under the SBK MRT line.

- With improved road and MRT connectivity, Gamuda aims to develop the Serai landbank into an integrated township over ten years – replicating if not besting the highly successful Kota Kemuning and Sierramas townships. But, contributions would only likely flow in from FY16F onwards.

Source: AmeSecurities