Journey to Wealth
Gamuda - OUTPERFORM - 29 June 2012
Period 3Q12
Actual vs. Expectations
Slightly above ours but within the consensus' expectations.
The 9M12 core net profit of RM373m made up 80% and 76% of ours and the consensus' forecasts of RM466.1m and RM493.3m respectively.
Dividends Declared a single-tier second interim dividend of 6 sen. Total dividend declared for FY12 is at 12sen.
Key Result Highlights
YTD, the 9M12 core net profit of RM373.8m increased by 35%, YoY on the back of a 14% increased in revenue. The overall improvement was supported by margin improvement in the construction and property divisions.
During the period, Gamuda also recognised about RM33m in exceptional gain arising from a land sale in Vietnam and IC12 accounting adjustment, which is not included in deriving our core net profit.
QoQ, the core net profit of RM123.0m increased by 4% despite a 8% decline in revenue to RM705m. This was in line with expectations and due mainly to the improved pre-tax margin for its double tracking project, which is already at the tail end of its construction.
YoY, the revenue grew by 13% backed by the Vietnam land sale transaction of about RM35m in 3Q12. Excluding the land sale, the revenue and core net profit (excluding the exceptional item) would have increased by 8% and 12% respectively.
Outlook The current order book stands at RM5.5b including the MRT tunnelling works (RM4.2b).
Its tender book now stands at RM10.0b. We believe that the management will only focus in bidding for niche projects like the EDTP Gemas-JB project with a contract value up to RM8.0b.
Change to Forecasts
We have tweaked our FY12 earnings higher by 5% as we imputed in a higher construction margin assumption.
Rating OUTPEFORM
Our OUTPERFORM rating is maintained as our Target Price implies a 34% upside from the current price.
Valuation We have increased our Target Price to RM4.64 from RM4.16 as we rolled over our valuation to FY13 based on an unchanged PER multiple of 18x.
Risks Constructions delays and cost overruns.
Source: Kenanga
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