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Gamuda (GAM MK)
by Chew
Hann Wong
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Share
Price:
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MYR4.88
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Target
Price:
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MYR5.55
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Recommendation:
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Buy
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Growth set to
resume
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Gamuda has had a good year in FY7/16 operationally,
bagging a sizeable MYR8.2b of construction wins and locking in MYR1.4b
in property sales. It is still eyeing a reasonable pipeline of
construction jobs. That said, FY16 earnings will be weaker YoY, but this
is already known, and we look forward for growth to resume in FY17. We
trim FY16 net profit forecast by 5%, and marginally tweak our FY17-18
forecasts. We remain positive; BUY with a shaved MYR5.55 SOP-TP
(previously MYR5.65).
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FYE Jul (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
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4,636.4
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2,399.9
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2,185.3
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3,357.0
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EBITDA
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775.2
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638.0
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708.3
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836.7
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Core net profit
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712.2
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682.1
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630.4
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719.9
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Core EPS (sen)
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31.0
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28.9
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26.2
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29.8
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Core EPS growth (%)
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4.9
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(6.6)
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(9.6)
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14.0
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Net DPS (sen)
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12.0
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12.0
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12.0
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12.0
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Core P/E (x)
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15.8
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16.9
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18.7
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16.4
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P/BV (x)
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2.0
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1.8
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1.8
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1.6
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Net dividend yield (%)
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2.5
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2.5
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2.5
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2.5
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ROAE (%)
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13.8
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11.6
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9.7
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10.4
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ROAA (%)
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7.6
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5.8
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4.6
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5.0
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EV/EBITDA (x)
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17.3
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23.4
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22.1
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19.6
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Net debt/equity (%)
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31.6
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50.6
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51.5
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58.2
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Share
Price:
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MYR1.70
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Target
Price:
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MYR1.80
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Recommendation:
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Buy
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Seemingly below
expectation
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1H16 results were again below ours/consensus expectations,
despite a sequential improvement in 2Q16 earnings. It appears that
maintenance activities have yet to taper off. Dividends were
nevertheless in line. Our forecasts and TP are unchanged for now pending
further updates from the results briefing today.
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FYE Dec (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
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5,594.5
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5,302.0
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6,365.0
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6,515.2
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EBITDA
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2,407.1
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2,468.8
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2,972.8
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2,896.6
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Core net profit
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341.5
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453.2
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571.5
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494.9
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Core EPS (sen)
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9.7
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9.1
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11.4
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9.9
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Core EPS growth (%)
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111.4
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(6.8)
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26.1
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(13.4)
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Net DPS (sen)
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4.5
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7.0
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8.0
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7.9
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Core P/E (x)
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17.5
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18.8
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14.9
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17.2
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P/BV (x)
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1.5
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1.5
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1.4
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1.4
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Net dividend yield (%)
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2.6
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4.1
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4.7
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4.7
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ROAE (%)
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8.7
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9.3
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9.7
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8.2
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ROAA (%)
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1.2
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1.5
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1.9
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1.6
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EV/EBITDA (x)
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na
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8.9
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7.1
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6.7
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Net debt/equity (%)
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361.6
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238.9
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205.8
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175.3
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Share
Price:
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MYR23.22
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Target
Price:
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MYR21.60
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Recommendation:
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Hold
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3Q results
within expectation
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No surprises to 3QFY9/16 core earnings. 9MFY16 FFB output
(-5.9% YoY) has lagged expectation but compensated by strong downstream
earnings thus far. We are keeping our earnings forecasts. KLK remains a
HOLD with a TP of MYR21.60 on unchanged 23x FY17 PER (-1SD of its
historical mean as it lacks catalyst).
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FYE Sep (MYR m)
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FY14A
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FY15A
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FY16E
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FY17E
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Revenue
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11,130.0
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13,650.0
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14,576.7
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15,970.1
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EBITDA
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1,728.1
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1,578.0
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1,703.3
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1,826.1
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Core net profit
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984.8
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818.7
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888.4
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1,000.5
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Core EPS (sen)
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92.3
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76.7
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83.2
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93.7
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Core EPS growth (%)
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10.4
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(16.9)
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8.5
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12.6
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Net DPS (sen)
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55.0
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45.0
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49.9
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56.2
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Core P/E (x)
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25.2
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30.3
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27.9
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24.8
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P/BV (x)
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3.2
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2.6
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2.4
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2.3
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Net dividend yield (%)
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2.4
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1.9
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2.2
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2.4
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ROAE (%)
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12.9
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9.4
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8.8
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9.3
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ROAA (%)
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8.0
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5.4
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5.0
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5.4
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EV/EBITDA (x)
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14.2
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16.6
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16.2
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15.1
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Net debt/equity (%)
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20.8
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26.0
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22.3
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20.7
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NEWS
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Outside Malaysia:
U.S: Fed officials split in July on whether rate hike
needed soon, with some preferring to wait because inflation remained
benign and others wanting to go soon as the labor market nears full
employment. Such divergence in views, as shown in minutes of the central
bank’s July 26-27 meeting, means officials are likely to need more
concrete evidence that inflation is picking up and economic growth is
strengthening before deciding that an increase in borrowing costs is
justified. Investors will listen closely for additional clues on timing
when Fed Chair Janet Yellen speaks Aug. 26 at an annual symposium hosted
by the Kansas City Fed in Jackson Hole, Wyoming. (Source: Bloomberg)
U.K: Jobs market shows resilience for now against Brexit
fallout. Britain’s labor market isn’t cracking under the weight of Brexit
yet. Companies added 172,000 jobs in the second quarter and the
unemployment rate held at 4.9%, showing resilience in the buildup to the
June 23 referendum when the U.K. decided to quit the European Union. While
the data available for July - after the vote - are more volatile, they
show an unexpected drop in jobless claims. The Bank of England expects
unemployment to rise only gradually - to 5.1% by early next year - though
it’s already taken pre-emptive action with an interest-rate cut and a new
round of quantitative easing to stave off a bigger shock. (Source:
Bloomberg)
Japan: Exports drop in July, marking 10th month of
decline. The continued drop highlights the difficulty of kick-starting
growth and pulling Japan’s economy out of the doldrums. Overseas
shipments fell 14% YoY in July, the Ministry of Finance said. Imports
dropped 24.7% YoY, leaving a trade surplus of JPY 513.5b (USD 5.2b).
(Source: Bloomberg)
Japan: BOJ cornered as banks seen running out of bonds to
sell. Japan’s biggest banks are running out of room to sell their
government bond holdings, pushing the central bank closer to the limits
of its record monetary easing. Japan Post Bank Co. and the nation’s three
so-called megabanks have almost halved their sovereign bond holdings to
JPY 114tr (USD 1.1tr) since March 2013, the month before the Bank of
Japan began buying the securities on an unprecedented scale to end
deflation. Government notes held by Mitsubishi UFJ Financial Group Inc.,
Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. are
approaching the level where further reductions would involve securities
they need as collateral. (Source: Bloomberg)
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Other News:
IPO: Serba Dinamik seeking to raise MYR600m. The
engineering company seeking to raise about MYR600m in IPO, in what would
be one of few listings in a lacklustre market, people familiar with the
matter said. A weak currency and battered commodity markets have hit
Malaysia's economic growth and contributed to waning investor appetite
for IPOs. There has also been a dearth of IPOs across Southeast Asia.
Serba Dinamik's IPO is targeted for the end of this year but the process
could spill over into 1Q17, said the people, who declined to be
identified as the discussions are private. Last year, Serba Dinamik
bought a Britain-based oil and gas firm to transfer technology to
Malaysia and explore business opportunities in Europe. (Source: The Sun
Daily)
Scomi Engineering: To enter china market in six months.
The company is looking to penetrate China’s monorail market, specifically
the second- and third-tier cities, in order to avoid competition with the
major rail companies there. At this stage, Rohaida, the company’s CEO is
talking to a few local companies but declined to disclose the specific
projects that it is eyeing in China. Currently, the company has an order
book of MYR2.1b and a tender book of about MYR20b. the tender book
includes monorail lines in Bangkok, Thailand and Istanbul, Turkey.
Projects in Bangkok should be awarded by mid-2017 and Istanbul tender
process was delayed due to the recent coup attempt in Turkey and the
company remains confident that the tenders will come through. (Source:
The Edge Financial Daily)
Paramount: Plans MYR405m launches for 2HFY16. The company
is planning of up to MYR405m new projects and additional phases of
existing developments in the second half of the financial year. They are
also finalizing plans for the roll-out of its new development on its
8.09ha tract in Batu Kawan, Penang, which carries a GDV of MYR1.3b. The
company said its projects in the pipeline, have a GDV of MYR8.3b and are
expected to see it through until 2026. Meanwhile, its unbilled sales as
at June 30, stood at MYR355m, with 1H16 sales of 156 units for MYR129m,
and progressive billings from ongoing developments. (Source: The Edge
Financial Daily)
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