Gamuda Berhad is an investment holding company. The Company is engaged in the business of civil engineering construction. The Company operates through three segments: Engineering and construction; Property development and club operations, and Water and expressway concessions. The Engineering and construction segment is engaged in the construction of highways and bridges, airfield facilities, railway, tunnels, water treatment plants, dams, general and trading services related to construction activities.
The Property development and club operations segment is engaged in the development of residential and commercial properties and club operations. The Water and expressway concessions segment is engaged in the management of water supply and the management and tolling of highway operations. The Company, through its subsidiaries, is engaged in property investment; operation of quarry, laying of road and manufacture of premix; rental of properties, and trading of construction materials.
Earning
Gamuda’s 2QFY21 net profit saw a decline of 25.2% YoY attributed to lower
contribution by all segments with property being the weakest during the
period. The performance was mainly due to re-imposition of movement
restrictions across all states in Malaysia, which has delayed the recovery
process after being impacted badly in FY20. The numbers are below Public Bank estimate but in line with Kenanga estimate.
Although there are signs of improvement particularly from its construction and concession segment, overall performance was dragged by Vietnam’s
property market, however. We revise our FY21-23F earnings lower by 7.2%
on average, reflecting the lower recognition from Vietnam as well as weaker profit margins owing to slower recoveries. Our TP is adjusted to RM3.77 (from RM3.94) after the revision. Maintain our Neutral call. – Public Bank
According to Kenanga prospective awards flow from upcoming megaprojects in sequence would be: (i) Australia M6 highway – by 2QCY21, (iii) Sydney Metro West Central Tunnelling Package – by 4QCY21, (iii) Sydney Airport Metro Line – by 4QCY21/1QCY22, (iv) Sydney Metro West Western Tunnelling Package – by 2QCY22, and (v) MRT3 – quickest would be late-CY21.
Currently, net gearing remains healthy at 0.27x and is expected to go down further in 3QFY21 as Gamuda has monetised RM350m worth of receivables owed to its 80%-owned subsidiary Gamuda Water (through asset backed securitisation)
Valuation
| Date | Target Price | Price Call | Source |
|---|---|---|---|
| 31/03/2021 | 3.77 | HOLD | PUBLIC BANK |
| 31/03/2021 | 4.17 | BUY | KENANGA |
| 31/03/2021 | 3.25 | HOLD | AmInvest |
Kenanga maintain OUTPERFORM with unchanged SoP-based TP of RM4.17.
AmInvest keep forecasts relatively unchanged and maintain our fair value of RM3.25 based on “sum of parts” (SOP)
Public Bank revises FY21-23F earnings lower by 7.2% on average, reflecting the lower recognition from Vietnam as well as weaker profit margins owing to slower recoveries. TP is adjusted to RM3.77 (from RM3.94) after the revision. Maintain our Neutral call.
