INVESTMENT HIGHLIGHTS

• Gamuda’s 70% JV with Dong Pi has received a contract for Marine Bridge project in Taiwan

• The job scope includes the construction and completion of the marine bridge, among other related works

• Total contract value equates to approximately RM521.7m

• New outstanding orderbook stands at RM10.9b, equals 3x revenue cover

• No change to forecasts, as the contract value is within our replenishment assumptions

• Maintain NEUTRAL with unchanged TP of RM2.89

Gamuda’s 70% JV with Dong Pi has received a contract for Marine Bridge project in Taiwan. Gamuda Berhad (Gamuda) together with its JV partner, Dong-Pi Construction Co. Ltd (Dong Pi) was awarded a contract for the Marine Bridge project in Taiwan. Letter of award was issued by CPC Corporation Taiwan, a state-owned petroleum, natural gas, and gasoline company.

Job scope. It involves the construction and completion of marine bridge for third liquefied natural gas (LNG) receiving terminal at Taoyuan, Taiwan. The proposed marine bridge is 1.23km long, connecting receiving terminal to a man-made island. Other works also include 284m long road embankment, as well as soil investigation, foundation, a temporary bridge and a working platform, together with environmental protection works.

Contract value at RM521.7m. An unincorporated JV Co was previously formed to undertake the job, in which Gamuda and Dong-Pi hold 70% and 30% stakes respectively. Scheduled completion is within 44 months, from April 2019 to November 2023.

Outstanding orderbook stands at RM10.9b. Based on the JV arrangement, Gamuda’s portion of the contract could be worth RM365.2m, to arrive at new outstanding orderbook of RM10.9b. This quantum provides earnings visibility for the next three years.

Our estimates remain intact. Post announcement, we make no adjustments to our FY19/FY20 forecasts as the job value falls within our range of contract replenishment assumptions.

Source: MIDF Research - 29 Mar 2019