We maintain our Buy call and fair value of RM4.49 following the release of 1HFY13 results that met expectations. We like Gamuda given that it is the best proxy to public infrastructure spending in Malaysia, and we believe its largest construction job, i.e. the SBK MRT Line project, has gone beyond “the point of no return”, given the massive physical works that have been carried out thus far.

A solid 1HFY13. 1HFY13 net profit came in within expectations at 50-52% of our full-year forecast and the full-year consensus net profit forecast. 6-8% completion for SBK MRT Line. Gamuda made good progress on the Sg Buloh – Kajang (SBK) MRT Line project. As at end-2QFY13, completion of the RM14bn elevated portion stood at 6% (vis-à-vis 5% three months ago) while the RM8.3bn tunnelling portion at 8% (vis-à-vis 7% three months ago).

Property: Malaysia firm but Vietnam weak. Gamuda maintained its FY13 local property sales target of RM1.35bn as the property market in the Klang Valley “appears to be stable” while the property market in Johor “still remains buoyant”. However, Gamuda said that the property market in Vietnam remains “very very weak”, with minimal sales achieved YTD.

A steep 6%-point jump in foreign ownership in Jan-Feb 2013. Gamuda revealed that its foreign shareholding jumped by almost 6%-points to 43% during the first two months of 2013 (that we believe partly explains Gamuda’s strong share price performance during the period).

Sale of Splash unlikely before the election. Gamuda believes the sale of its 40% stake in water producer Splash is unlikely to be concluded before the 13^th general election.

Investment case. We like Gamuda: (1) As it is the best proxy to public infrastructure spending in Malaysia; (2) As we believe the SBK MRT Line project has gone beyond “the point of no return; and (3) For its large market capitalisation and high share liquidity. Maintain BUY.

Source: RHB