Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: MIMB



Gamuda Bhd is expected to see an average of 18 per cent growth in revenue over the FY11-FY13, says MIMB Investment Bank. It said top line growth would be mainly led by construction and property divisions.

"The ongoing catalyst for the construction division is the approval of the RM36 billion mass rapid transit (MRT) project, while growth in the property division is expected to be 55 per cent year-on-year, driven by property sales from Vietnam," MIMB said in a note today.

The research house said details of the MRT project is scheduled to be announced on Oct 26. "As this project is one of the very few mega projects in recent years, we believe it will attract a lot of interest. Gamuda being one of the favourite picks for this mega project, should boost its earnings prospect while the funding issue needs to be ironed out.

"As we believe the MRT project is long-term in nature and the valuation of Gamuda appears rich, we initiate coverage on this stock with a neutral rating," it said.

MIMB also raised Gamuda's target price to RM4.10 from RM3.83 previously. With a current order book of RM6 billion, it said Gamuda's construction division will be kept busy for the next few years, when the MRT project materialises.

Construction of Yen So Park will be operating at full pace after mid-FY11. But the full impact of the project revenue from Vietnam will be only felt in FY12, MIMB added.

"The Economic Transformation Plan (ETP) also mentions the construction of seven new highways. If these projects are open for tender, we believe Gamuda would be keen to participate and it should be one of the preferred parties, due to track record and financial muscle," it said. -- Bernama