Journey to Wealth
Gamuda - Lacking near-term contract surprises HOLD
- Maintain HOLD on Gamuda with our fair value tweaked slightlyupwards by 2% to RM3.79/share on an unchanged 5% discount to its revisedSum-Of-Parts (SOP) value, following better-than-expected 1HFY12 earnings.
- For the 1HFY12 reporting period, Gamuda reported a net profitof RM269mil on total turnover of RM1.4bil. Its results constituted circa 57% ofour previous full-year forecast, and 54% of consensus estimates.
- The positive variance came from: (i) higher-than-expected constructionmargins which doubled to 12.4% in 1HFY12; (ii) higher-than-expectedcontributions from the water & expressways division and (iii)lower-than-expected effective tax rates (21% vs our previous forecast of 25%).
- Construction earnings jumped 89% YoY, as physical progressat the Ipoh-Padang Besar electrified double tracking project has reached 77%.Construction margins doubled to 12.4% against 6.2% in 1HFY11.
- Gamuda's outstanding orderbook stands at ~RM5.8bil with theinclusion of the RM8.2bil tunnelling contract for the Sg.Buloh-Kajang (SBK) MRTline (Gamuda's 50% share:RM4.1bil). If the Project Delivery Partner (PDP) role awardedto the MMC-Gamuda JV is to be included, its orderbook would expand close to arecord RM12bil.
- Property pre-sales also doubled to RM870mil from a year ago.The encouraging response at Gamuda City (Hanoi: pre-sales: >RM120mil) wasmitigated by a sluggish debut for Celadon City (Ho Chi Minh City) despite thelatter booking in gains from the sale of land to AEON during the quarter.Unbilled sales stood at ~RM1.3bil.
- The MMC-Gamuda JV is awaiting a formal award from MRT Cofor the SBK tunnelling job ' real physical works should kick-off by March 2013.85% of the 90 works packages under this new line should be awarded by October2012.
- We have raised FY12F-14F net profit forecast by 5%-6%. But,our HOLD call on Gamuda remains as the SBK MRT line project wins have largelybeen crystallized, with only the actual award of the tunnelling job pending. Wedo not expect a tangible decision on another two new MRT lines to materialiseanytime soon.
- The RM8bil Gemas-JB double tracking project appears to bethe only other near-term catalyst ' where the GamudaChina Railway ConstructionCo is reportedly among three consortiums being considered for the job.
- The water consolidation process in Selangor is still frustratinglyslow ' with no resolution in sight for now. SPLASH' receivables are growing~RM50mil every quarter
Source: AmeSecurities
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