We maintain our Buy call, forecasts and fair value of MYR5.45 following the release of 9MFY13 results that met expectations. Gamuda is the best proxy to public infrastructure spending in Malaysia, particularly, the Klang Valley MRT project. It is likely to take the lead in terms of reaction to new price catalysts given its large market capitalisation, and high Beta and share liquidity. 

- A solid 9MFY13.9MFY13 core net profit (excluding MYR113m provision for contract dispute arbitration losses) came in within expectations,

- 8-14% completion for SBK MRT Line. Gamuda made good progress on the Sg Buloh – Kajang (SBK) MRT Line project. As at end-3QFY13, completion of the MYR14bn elevated portion stood at 8% (vis-à-vis 6% three months ago), while the RM8.3bn tunnelling portion at 14% (vis-à-vis 8% three months ago).

- Cabinet approval for Line 2 by 3Q 2013? Gamuda remains optimistic that the Cabinet will give its approval for the MYR25bn Line 2 of the Klang Valley project or the Sg Buloh - Serdang - Putrajaya (SBSP) Line by 3Q 2013.

- Property: Johor the star performer. Gamuda raised its FY13 local property sales target by 20% to MYR1.62bn from MYR1.35bn three 
months ago thanks largely to the “highly buoyant” property market in Iskandar, Johor,

- Maiden launch of new Rawang township project in FY16. Gamuda guided maiden launch from its new township project in Rawang with a total GDV of MYR5.3bnin FY15-16.

- Investment case. We like Gamuda: (1) As it is the best proxy to public infrastructure spending in Malaysia, given its dominant role in the Klang Valley MRT project; (2) It has secured the best parts of the Klang Valley project, i.e. project delivery partner(PDP) (6% fee) and high-margin tunneling; and (3) It is likely to take the lead in terms of reaction to new price catalysts (for instance, Cabinet approval for Line 2 of the Klang Valley project) given its large market capitalisation, and high Beta and share liquidity. Fair value is MYR5.45. Maintain BUY.

Source: RHB