• Maintain BUY (TP: RM5.16). Gamuda Berhad (Gamuda) 1QFY24 core net profit of RM195.0mn reflecting an impressive YoY growth of 34.5%, mainly driven by the surge in revenue from overseas construction project. Overall, this made up 19.9% and 19.2% of our and consensus’ estimates respectively. The company declared an interim DPS of 6sen. We remain optimistic with its earnings outlook owing to its huge construction orderbook of RM26bn and unbilled property sales of RM6.7bn. We maintain BUY on Gamuda, with SOP-derived TP of RM5.16.

• Key highlights. Gamuda faced a 24% YoY drop in overseas property revenues (RM247mn). However, a notable 12% increase in domestic revenues cushioned the division's overall decline, maintaining it at RM605.9mn (-6% YoY). Despite the revenue setback, net profits surged to RM77.1mn (+32% YoY) as both domestic and overseas profitability improved. Concurrently, Gamuda Engineering Australia witnessed a sevenfold increase in revenues, reaching a 39% completion of the Sydney Metro West Western Tunnelling Package (SMW-WTP) project. Additionally, Gamuda recently secured a SGD509.58mn (RM1.77bn) design and construction contract for Singapore's 8th MRT line, West Coast station and tunnel. This independent venture substantially boosted Gamuda's outstanding orderbook to RM26bn (RM20.6bn 4QFY23). Gamuda also declared interim dividend of 6.0sen which is inline with our estimated total FY24F DPS of 12.0sen, translating into a DY of 3.0%.

• Earnings Revision. We maintain our FY24F-FY25F earnings forecast at this juncture pending further details on Upper Padas hydro project.

• Outlook. Gamuda is poised to secure a 45% equity stake in the RM4.0bn Upper Padas hydro Build-Operate-Transfer (BOT) project, acting as a cornerstone for their emerging Renewable Energy recurring income division. While the validity of the MRT3 tender is extended until March 2024), the Penang LRT is currently finalising its implementation model, represents another potential triumph for the group.

Source: BIMB Securities Research - 7 Dec 2023