Maybank IB expects Gamuda’s core net profit to hit RM1b mark in FY2025

• In a note on Monday, the research house said Gamuda’s FY2023 CNP grew 7% year-on-year, another record high, as contributions from overseas engineering and construction (E&C) jobs offset earnings foregone post the sale of its tolled highways in October 2022.

KUALA LUMPUR (Oct 2): Maybank Investment Bank Research (Maybank IB) has maintained its “buy” rating for Gamuda Bhd at RM4.31, with an unchanged target price (TP) of RM4.80, and said Gamuda’s core net profit (CNP) for the financial year ended July 31, 2023 (FY2023) was 104% of the house forecast (in line), and 110% of the consensus (above).

In a note on Monday, the research house said Gamuda’s FY2023 CNP grew 7% year-on-year, another record high, as contributions from overseas engineering and construction (E&C) jobs offset earnings foregone post the sale of its tolled highways in October 2022.

“We raise [our] FY2024 CNP [forecast] by 4%, and trim FY2025 by 7% post house-keeping. We also introduce FY2026.

“We expect CNP to hit the RM1 billion mark in FY2025. This could be sooner if the E&C work pace and margins outperform.

“Our sum-of-parts-based TP is unchanged at RM4.80,” it said.

Maybank IB said its earnings revision incorporated a RM10 billion per annum E&C win assumption.

It said this is possible assuming A$2 billion from Australia, and the balance from Malaysia and other overseas markets.

“Prospects in Malaysia include the MRT3, Penang LRT and Pan Borneo Highway Sabah.

“Gamuda also offers exposure to the National Energy Transition Roadmap's higher renewable energy/solar capacity target via 30% associate ERC Energy, either as an engineering, procurement, construction and commissioning contractor or an asset owner.

“Gamuda’s net gearing of 0.25 times at end-FY2023 provides RM5 billion in debt headroom to reach its self-imposed 0.7 times net gearing cap,” it said.

At the time of writing on Monday, Gamuda had shed 0.45% or two sen to RM4.41, with 696,300 shares traded.

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