Within expectations. Gamuda's FY12 revenue of RM3.09bn was 15.5% higher y-o-y, driven by its property division, which registered RM1.5bn in new sales during the year. Meanwhile, pre-tax profit climbed 33.7% y-o-y to RM728.2m, lifted by better construction margins recognised from its double-track project as well as its property division. Growth, however, was partly offset by its concession business due to a one-off hike on Litrak's amortisation costs arising from revised traffic projections for the LDP. Overall, the FY12 net profit came in at RM547.3m (+28.7% y-o-y), in line with both our and consensus' expectations, and comprising 103.3% and 104.6% of the full-year estimates respectively. On a quarterly basis, the 4QFY12 revenue stood at RM968.8m (+19.6% y-o-y, +34.7% q-o-q) while net profit totaled RM140.5m (+11.3% y-o-y, +1.8% q-o-q).

Underground works in place. At the briefing, management also said that progress on the underground portion of the Sungai Buloh-Kajang (SBK) MRT line is largely on track. Its tunnel boring machines will commence work in 1QCY13 at the Pasar Rakyat and Semantan portals. The first batch of machinery is expected to be delivered in Jan 2013. Meanwhile, all land acquisitions have been completed.

More packages to be dished out. On the SBK line as a whole, 90% of the available packages worth more than RM19bn have been awarded. As for civil works, the three remaining elevated station packages could be out as soon as next month. The remaining packages relating to non-civil and systems will be progressively rolled out, with a target 98% of all the packages set to be awarded by the end of this year.

Property segment slows down. Management has conceded that its property sales have indeed slowed down as we had previously cautioned. It registered new FY12 sales of RM1.5bn, of which RM380m was from Vietnam, in line with our expectations but below management's previous guidance for RM2bn. The company's unbilled sales now stand at RM1.2bn. Going forward, the group targeting RM1.7bn in new sales for FY13 against our forecast of RM1.3bn for FY13 and RM1.6bn for FY14, as we see further weakness in its Vietnam property projects amid waning market sentiment and a bearish outlook for the local property sector.

Limited progress on concession assets. Meanwhile, management said that there has been limited progress in talks on the potential disposal of its water and toll concessionaries in Malaysia. We also do not see much progress on this, at least until the national election is over.

Variation order may amount to RM500m. Recall that media reports had previously speculated that MMC-Gamuda will seek a variation order of as much as RM1.5bn from the Government due to cost overruns in the RM12.5bn Ipoh-Padang Besar double-tracking project. Gamuda's management confirmed that the company would soon submit a variation order as negotiations with the Government are likely to commence in 1QCY13. Although the exact quantum was not revealed, management hinted that the sum involved is likely to be more than RM500m, but much lower than the reported RM1.5bn.

Potential jobs ahead. With the SBK line largely on schedule, attention will shift to securing more jobs in the near term. This will include the RM3.7bn Langat 2 water treatment plant, for which tenders will close on 20 Nov. We understand that the first phase of the plant, with an initial capacity of 1,000MLD, could cost close to RM1bn. Meanwhile, Gamuda hopes that the proposed alignment for the remaining lines of KV MRT will be finalised by 1QCY13, with progressive implementation to follow suit. Should this materialise, we continue to like the company's chances of securing the Project Delivery Partner role as well as that for the tunneling portions of the remaining two lines, given its existing involvement in the SBK line. With the national election now rumored to be held in November, we expect to hear news relating to the much-hyped RM8bn Gemas-Johor Bahru double tracking project, in which Gamuda will be partnering China Railway Construction to launch a joint bid.

BUY. With the FY12 results largely in line, we make no major changes to our core assumptions. Nonetheless, our net profit forecasts are revised marginally lower by 0.8% for FY13 and 1.5% for FY14 for housekeeping purposes following the release of the company's full-year results. That said, we are maintaining our BUY call, at a revised SOP-based FV of RM4.33. This is also after rolling forward our valuation to our revised FY13 forecasts as well as pegging a lower PE of 16x (from 18x previously) to Gamuda's construction and property earnings in light of the increasingly cautious outlook for its property segment.

Source: OSK