INVESTMENT HIGHLIGHTS

• Earnings met estimates

• Buoyed by progress billings and property sales

• Bright prospect beckons

• Altogether, we maintain our NEUTRAL recommendation with an adjusted TP of RM5.25 per share

Earnings met expectations. Gamuda’s 6MFY18 PATAMI registered RM414.2m (+26.1%YoY) reflecting positive revenue increment from construction and property segment. In addition, its 6MFY18 earnings met ours and street’s target at 51.0% and 50.0% of full year estimates respectively. Gamuda’s 6MFY18 results met our estimate as we have assigned lower construction progress billings rate for the cumulative period due to project completion.

Earnings supported by healthy progress billings and property sales. Construction segment registered a healthy increase in (a) revenue – RM795.8m (+33.32%YoY), and (b) PBT – RM729.3 (+41.6%YoY). So far, we are confident that the progress of MRT2 SSP and Pan Borneo (Pantu Junction to Btg Skrang) will be on schedule thus maintaining our current earnings estimates.

Bright prospect beckons. Strong influx of mega projects is expected to contribute to Gamuda’s current estimated unbilled orderbook of RM7.7bn by another +15.0%. We are expecting that Gamuda may win sub-contracting jobs from Gemas-JB double track railway project that has been awarded to YTL Corp.

Recommendation. We maintain our NEUTRAL recommendation due to YTD share price run-up with an adjusted TP of RM5.25 per share based on sum-of-parts valuation (SOP). We refined our valuation to reflect changes in debt value.

Source: MIDF Research - 26 Mar 2018