Gamuda (BUY): Clinched Penang project; Another breakthrough

Gamuda (BUY, TP: MYR6.00, SP: MYR4.30): Another breakthrough

What’s New

·         Gamuda-led consortium was appointed as PDP for PTMP.

·         Gamuda owns 60% of the consortium while two non-listed Penang companies own 20% each.

·         Ideal Property Development S/B (20%) is an experience developer in Penang while background of Loh Phoy Yen Holdings (20%) is uncertain but it is related to Loh Boon Siew Family in Penang.

·         The PDP will start finalizing the details of the master plan including designs and value of the project. It will also need to obtain approval from federal government and gather public feedback.

·         They expect to sign the PDP agreement within 6 months.

·         Thereafter, the PDP would call for tenders and the first phase of the project will start in 2017.

What’s Our View

·         Positive as Gamuda’s consortium is the only PDP appointed. Hence it would have better control in the project.

·         It could also leverage on its strategic partners’ experience in property development in Penang.

·         This represents another key milestone for Gamuda that enhances its long term earnings visibility.

·         Aside of the PDP, Gamuda also targets to win the construction works in PTMP which would boost its earnings further.

·         We have yet to impute the PTMP into our earnings forecasts pending finalization of the project’s details.

·         Reiterate BUY with unchanged RNAV-TP of MYR6.00.