Affin Hwang maintains Hold on Gamuda, TP at RM4.08

KUALA LUMPUR: Gamuda Bhd’s 9MFY19 net profit of RM521mil came in above expectations with higher-than-expected profit margins for its construction and property divisions.

Affin Hwang Capital research said in a note that the earnings result came as a surprise, meeting 77% and 85% of its and consensus full-year net profit forecasts respectively.

“Revenue declined 1% yoy to RM5.2bn in 9MFY19, mainly due to lower property revenue (-5% yoy) while revenue for its construction (+1% yoy) and concessions (+2% yoy) grew marginally in 9MFY19.

“PBT fell 14% yoy to RM733m, mainly due to lower construction (-15% yoy) and concessions (-19% yoy) earnings, while property earnings grew 13% ,” said the research house.

Affin Hwang noted that Gamuda maangement plans to expand its construction operation overseas with a branch office in Australia and 60 staff to participate in tenders.

Accordingly, Gamuda is expected to tender submissions worth A$15bil in infrastructure projects and aims to secure A$2bil worth of new contracts with local partners.

Meanwhile, the group is optimistic of securing long-term financing from the federal government and Asian Development Bank to fund the Penang Transport Master Plan, which it plans to start in 2H20.

For 9MFY19, property presales came in at RM2bil, which may mean full-year presales will come in below the RM4bil target.

Affin Hwang maintained its hold call on Gamuda with target price of RM4.08.

Source: TheStar