In 3QFY14, Gamuda registered a net profit of RM177.9m (+4.6% QoQ,
+149.2% YoY), driven by double digit growth of its construction and
property divisions. YTD, the Group netted RM513.5m (+37% YoY) in net
profit which was within our and consensus full year estimates. Recall
that 3QFY13 was dragged down by arbitral provisions of RM113.0m.
Performance-wise, the Group‟s YTD net profit constituted 77% and 74% on
our and consensus estimates. We understand that the possibility of a
satisfactory resolution for SPLASH is imminent now, given that WASIA
(S114) will no longer be invoked after the acceptance by the Puncak
Group recently. With the intervention from the Federal Governement, we
believe Gamuda might just get a fair offer for its water assets, i.e. at
book value (RM2.54bn), which could prevent a massive financial loss of
c.RM920m. A second interim single-tier dividend of 6 sen was proposed,
bringing YTD dividend to 12 sen.
Construction division is solely driven by KVMRT Line 1 (SBK Line), with the outstanding orderbook at RM2.3bn in Q3FY14 (from 2.7bn in Q2). PBT for the construction division improved to 9.1% from 7.7% in Q2 as tunneling works progressing well within schedule. We understand that the major upcoming milestone for the project is the completion of karstic limestone (the most challenging part of tunneling works) tunneling in a month‟s time. After which, initial handover to systems specialists should take place once the elevated guideways are completed. The cumulative financial progress on the underground works and PDP scope stood at 45% and 30% respectively. We understand major contract awards for MRT 2 (RM25bn) will commence by early-2016.
Property sales target of RM1.9bn should be within reach, despite the slowdown of sales especially in Iskandar Malaysia. Property PBT margins remained steady at 26%. During the quarter, Gamuda achieved new sales of RM500m, bringing YTD new sales to RM1.5bn or 83% of its sales target. Key projects driving the sales are Horizon Hills (45%), Bandar Botanic (30%) and Robertson (12%). We understand that Horizon Hills experienced a slowdown in sales (sales dropped 20% YoY) due to the cooling measures and oversupply concerns in Iskandar Malaysia. Unbilled sales remained healthy at RM1.8bn.
Maintain Neutral and our TP of RM4.90, pegged on parity with our sum-of-the-parts (SOTP) valuation. Earnings estimates are kept unchanged for now as we believe the Group could see its property margins to be slightly squeezed due to GST costs as evident by recent provisions reported by a few property developers
Source: PublicInvest Research - 27 Jun 2014
Construction division is solely driven by KVMRT Line 1 (SBK Line), with the outstanding orderbook at RM2.3bn in Q3FY14 (from 2.7bn in Q2). PBT for the construction division improved to 9.1% from 7.7% in Q2 as tunneling works progressing well within schedule. We understand that the major upcoming milestone for the project is the completion of karstic limestone (the most challenging part of tunneling works) tunneling in a month‟s time. After which, initial handover to systems specialists should take place once the elevated guideways are completed. The cumulative financial progress on the underground works and PDP scope stood at 45% and 30% respectively. We understand major contract awards for MRT 2 (RM25bn) will commence by early-2016.
Property sales target of RM1.9bn should be within reach, despite the slowdown of sales especially in Iskandar Malaysia. Property PBT margins remained steady at 26%. During the quarter, Gamuda achieved new sales of RM500m, bringing YTD new sales to RM1.5bn or 83% of its sales target. Key projects driving the sales are Horizon Hills (45%), Bandar Botanic (30%) and Robertson (12%). We understand that Horizon Hills experienced a slowdown in sales (sales dropped 20% YoY) due to the cooling measures and oversupply concerns in Iskandar Malaysia. Unbilled sales remained healthy at RM1.8bn.
Maintain Neutral and our TP of RM4.90, pegged on parity with our sum-of-the-parts (SOTP) valuation. Earnings estimates are kept unchanged for now as we believe the Group could see its property margins to be slightly squeezed due to GST costs as evident by recent provisions reported by a few property developers
Source: PublicInvest Research - 27 Jun 2014
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