• FY24 core net profit reached a record high of RM884m (+7% YoY), but missed our and consensus expectations

• Management targets to secure RM15bn new construction contracts by end CY24 and RM6bn new sales in FY25E

• Cut EPS forecasts by -4%. Maintain BUY rating with a lower target price of RM9.20

Record high earnings

Gamuda’s FY24 revenue surged 64% YoY to RM14.8bn, driven by 71% increase in construction contribution, supported by stronger overseas revenue. The property revenue also rose 47% YoY, attributed to higher billings from both domestic and international projects. The lower EBITDA margin, as a result of higher oversea contributions, drove FY24 core profit to RM884m (+7% YoY). Despite delivering a record high profit, results came in below expectations at 94% of our/consensus forecasts, respectively. The deviation from our forecast was due to negative forex impact from its overseas operations, which affected 4QFY24 earnings by RM30–40m.

Near-term prospects driven by local jobs; target RM6bn sales in FY25E

Gamuda has secured c.RM10bn new contracts in FY24. Management sees potential upside to its earlier RM25bn replenishment target for FY24–25E. The group aims to secure RM15bn new orders by end CY24, potentially increasing its outstanding orderbook from the current RM25bn to above RM30bn. Near-term prospects include the Penang LRT (c.RM5bn), Upper Padas Hydro (c.RM3bn), Sabah water treatment plant, Australia renewable projects and potential data centre projects (c.RM3bn). For the property business, Gamuda recorded RM5bn new sales (+22% YoY) in FY24, meeting its internal RM5bn target. Looking ahead, Gamuda targets RM6bn new sales (+20% YoY) in FY25E, which we believe will be anchored by the upcoming developments in Vietnam.

Reiterate BUY with lower TP of RM9.20

We lower our FY25E earnings by –4% to account for the negative forex impact but partly offset by our higher imputed orderbook replenishment of RM18bn/RM20bn (from RM15bn/RM18bn). We reiterate our BUY rating with a lower SOP-derived target price at RM9.20 (from RM9.50). We continue to like Gamuda as a key beneficiary of accelerated infrastructure spending and DC influx. Key risks to our BUY call include slower work progress and weaker-than-expected property sales.

Source: Philip Capital Research - 27 Sep 2024