FW: AmBank Research - Gamuda : 1QFY18 net profit grows 25% YoY BUY, 18 Dec 2017

 

 

STOCK FOCUS OF THE DAY         

Gamuda : 1QFY18 net profit grows 25% YoY                                         BUY

 

We maintain our BUY call, forecasts and SOP-based FV of RM5.95 which values Gamuda's construction business at 16x CY18 net profit, in line with our benchmark 1-year forward P/E of 14-16x for large-cap construction stocks. Gamuda's 1QFY18 net profit came in within expectations at 27% and 26% of our full-year forecast and the full-year consensus estimates respectively. Its 1QFY18 net profit jumped 25% YoY driven largely by the construction division as the progress on the MRT2 project gathered momentum.

 

During a recent analyst briefing, Gamuda said that for MRT3, it will “work its way into the project” as a local partner to the foreign turnkey contractor given: (1) the local participation requirement of >40% imposed by MRT Corp; (2) its strong value proposition as a local partner with the database on the entire MRT project; and (3) its possession of 12 tunnel boring machines. For the ECRL, Gamuda is still in talks with China Communications Construction Company (CCCC), the main contractor, for the last first-line subcontract spanning over 150km, which is worth RM5–7bil based on our estimates. It is also bidding for the PDP role for the KL-Singapore high speed rail via a 50:50 JV with MRCB.

 

With these mega projects on its radar, Gamuda guided for job wins of RM6–8bil annually over the short term. Given the lumpy size and low predictability in terms of the timing of the award, our forecasts conservatively assume Gamuda to only secure RM2bil new jobs annually in FY18-20F. Its construction order backlog stands at RM7.3bil at present.

 

Others :

Bison Consolidated : Underwhelming margins weigh on earnings              HOLD

 

 

QUICK TAKE

MSM Malaysia : Govt issues APs for refined sugar again                                HOLD

 

 

NEWS HIGHLIGHTS

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Sunway: Aims to replicate Sunway City’s success in Iskandar

Property Sector: Moderate uptick in industrial property

KWAP Investment: KWAP buys 45% stake in Vortex Solar

 

 

 

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The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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