-  Maintain HOLD on Gamuda, with an unchanged fair value of RM3.79/share (5% discount to its sum-of-parts value). Gamuda recorded a 9MFY12 net profit of RM407mil (+36% YoY), coming in at 81% of our full-year forecast (street's: 78%). We deemed its results to be in line with expectations, as 4Q could slow down on:- (i) the completion of two construction jobs in 4Q12; and (ii) the balance of land sale gains at the Celadon City in Vietnam to AEON Co being booked in 3QFY12.

-  Gamuda declared a second tax-exempt interim DPS of 6 sen, bringing total 9MFY12 DPS to 12 sen ' just short of our FY12F forecast of 13 sen or a yield of 4%.

-  Gamuda's earnings jumped 36% YoY on a 9M basis, boosted by stronger contributions from its construction (+58% YoY) and property (+89%) divisions. The construction division's margins expanded further to 14.8% (9MFY12: 13.2%). Progress on the Ipoh-Padang Besar double tracking project has reached 81%, while both the Yenso Park infra works and New Doha International Airport projects are in the midst of being handed over.

-  Gamuda's outstanding order book stands at RM5.5bil, with RM4.2bil or ~76% stemming from the Klang Valley MRT project. Coupled with its PDP role in the project, we expect the MRT to start contributing more meaningfully from FY13F onwards.

-  Gamuda is targeting over RM10bil worth of new contract opportunities in 2013. These would include the Klang Valley MRT 2 & 3 as well as Seremban-Gemas double tracking projects. But any firm decision would only likely materialise after the 13^th  General Election.

-  Gamuda has procured all 10 of the tunnel boring machines (TBM) earmarked for the MRT project. Initial works have commenced on five out of the seven underground stations. Following MRT Corp's award of another two viaduct packages (V2 & V3), ~77% or 33 packages have already awarded to-date, while another 23 are at the tendering stage. 

-  9MFY12 property new sales stood at RM1.3bil (+30% YoY), but new sales have slowed in 2HFY12 on a weaker macro outlook and lumpy land sales at Celadon City booked during 2Q-3QFY12. As such, the group may revise downwards its RM2bil pre-sales target by ~15% - closer to our FY12F forecast of RM1.7bil. Gamuda's recent landbanking deal was a 5-acre piece of freehold land in Kelana Jaya (GDV: RM600mil) earmarked for SOHO serviced residences and a lifestyle retail development. This translates into a land cost of ~RM450 psf.

-  Gamuda may opt to re-distribute half of the proceeds from any divestment of its toll investments, subject to its future capex needs. But, we stress that while there have been interested parties (PLUS, Khazanah, UEM), nothing concrete has been forthcoming as yet.

Source: AmeSecurities