Gamuda is poised to release its 4QFY12 results later on 27th Sept. We expect no major surprises with FY12 net profit likely to be line with our full-year estimate of RM529.8m. Although we continue to caution investors on potential weakness in its property sales, we see strength in its core construction earnings as works on the KV MRT go into full swing, while more mega-billion projects could be up for grabs post-national election. Maintain BUY with our FV maintained at RM4.46.
FY12 numbers likely in line. We expect no major surprises for Gamuda's upcoming 4QFY12 results scheduled for release on 27th Sept. Inclusive of the RM50m gain from land disposal booked in earlier, FY12 net profit is likely on par with our estimate of RM529.8m, driven by its construction division with the KV MRT SBK line gradually gathering momentum coupled with its property division which registered RM799.1m in revenue for 9MFY12.
Update on SBK line. MRT Corp has so far awarded 40 out of a total of 85 contract packages worth RM16.5bn on the SBK line. We understand that the remaining jobs totaling RM3.5bn-RM4.0bn will be dished out progressively. These include the RM1.6bn rolling-stock provision for 58 sets of four-car train, which we understand to have received three bids from Changchun Railways Vehicle, Siemens SMH Rail Consortium and CSR Zhuzhou Electric Locomotive respectively in the form of JV with local partners. Also in the pipeline are the v8 viaduct package likely to be clinched by MRCB, and three elevated station packages. With a majority of the packages awarded out by year-end, we view the progress as largely on schedule as MRT Corp has earlier guided.
Underground works on schedule. On the other hand, we understand that Gamuda's team has started works on all seven underground stations on the SBK line, including the Bukit Bintang station which has previously drawn much public attention. Potential jobs after election. Moving into 2013, we expect to see a lineup of mega-billion projects to potentially push up Gamuda's contract flows after the general election, which is now rumoured to be held as soon as November this year. Key projects that management is actively looking at include the RM8bn Gemas-Johor Bahru Electrified Double Tracking, in which Gamuda is bidding with China Railway Construction, and the RM3.7bn Langat 2 water treatment plant with tenders called by PAAB closing on 20 Nov. Should Gamuda
secure both these projects at a presumed 50% share, its orderbook could swell from RM5.4bn as of April 2012 to over RM10bn.
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Possible slowdown in property segment. Recall that Gamuda's 9MFY12 property sales totalled RM1.2bn vis-''-vis its full-year target of RM2.0bn, with unbilled sales amounting RM1.3bn. We make no changes to our FY12 sales target of RM1.5bn as we reiterate our belief that the property market has most likely experienced some slowdown over the last three to six months, amid iProperty's recent comments that property transactions in the high-end market (>RM500k/unit) have dipped marginally. Our FY13 and FY14 forecasts stand at RM1.8bn and RM2.0bn respectively.
BUY. All in, we expect no major surprises in Gamuda's upcoming 4QFY12 results release and hence reiterate our BUY call with our SOP-based FV unchanged at RM4.46. Key catalysts going forward include the sooner-than-expected polling date which could pave the way for the potential implementation of the RM6bn Gemas-Johor Bahru double tracking project, the rollout of the RM3.7bn Langat 2 water treatment plant, as well as potential sale of its highway concessions.
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