Date: 29 September 2016
Company Name: Gamuda Bhd
Flat Q4 2016 Profit
Gamuda Bhd recorded RM152.1 million in net profit for the fourth quarter ending 31 July 2016, which is down marginally by 1 percent, while revenue was at RM614.4 million, which has gone down by 1.4 percent.
In its announcement to Bursa Malaysia, Gamuda Bhd said the decrease in revenue was mainly due to the tapering of underground and elevated works of the Klang Valley Mass Rapid Transit (KVMRT) Line 1, and also due to the softening of the Malaysian property market.
This was even though the group’s profit before tax for the quarter was up by 10.3 percent, attributed mainly to cost savings arising from the near completion of the same project. For the full-year, the group recorded RM626.13 million in net profit and RM2.12 billion in revenue, which are down 11.59 percent and 8.21 percent respectively.
Although its property division was hit by the softening property market, the group said sales from properties in Vietnam and Singapore have continued to improve. In its water and expressway concessions division, the group said the increase in revenue and profit before tax for the year was a result of the toll rate hike of certain expressways.
On its prospects for the year ahead, the group said it anticipates a good performance from ongoing construction projects and steady earnings from its expressway concessions division. The property division’s performance is expected to pick up in the next few quarters due to the launches of several new projects in Malaysia and overseas.
Higher Target Price
With this vision ahead, CIMB Equities Research has raised the target price for Gamuda Bhd from RM5.92 to RM5.97, which is an upside of 21.8 percent from its last traded price of RM4.90, while the infrastructure and property company eyes RM3 billion to RM4 billion worth of infrastructure projects in the next 12 months.
These could come from: LRT 3; subcontract works for the Gemas-JB double-tracking rail project; and Pan Borneo Highway in Sabah. The new guidance puts the value of each targeted package at RM1 billion.
Gamuda has so far secured underground tunnelling works from MRT 1 and MRT 2 via the MMC-Gamuda JV (50:50). The group is positioning to tender for the RM30 billion to RM40 billion KL-Singapore high-speed rail (HSR) project now that the project has better tender time visibility scheduled at the end of 2017.
FY16 marked an inflection point where new MRT 2 earnings on the back of a high total contract value of RM9 billion began to flow into FY17.
(News Source from Star Business News)