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BUY RM3.21 KLCI : 1,325.87
Price Target : 12-month RM 4.35
Reason for Report : Analyst briefing on MRT project
Potential Catalyst: MRT project, Vietnam sales
• More positive on RM36bn MRT project post-briefing
• 3QFY10 result was in line
• High conviction infrastructure pick with RM4.35 TP
MRT- from the horse’s mouth. Dato Lin made a rare appearance at the analyst briefing yesterday and talked extensively about the proposed RM36bn MRT project. The key takeaways are:- i) the probability of getting cabinet approval is high since it was included in the 10MP, the government has frozen land acquisition for key corridors, the MMC-Gamuda JV has started initial soil investigation and engaged foreign town planners; ii) the JV is only interested in tunneling works worth RM13-14bn, but wants to act as ‘Chariot Master’ for the other infrastructure portions. The sweetener for this is a potential share with the government for the project budget and VOP for certain cost items if there is a surplus; and iii) the JV is committed to raise RM3bn in bridging loan and RM1.8bn performance bond to finance initial works under construction. The remaining works will likely be funded by the government on a deferred payment basis. The JV hopes to have the final design by September and commence work in early 2011.
Another solid quarter. 3QFY10 result was within our and consensus expectations with net profit at RM73m (+7% q-o-q, +58% y-o-y), the strongest since the last seven quarters. 3QFY10 construction EBIT margin improved further to 6.0% vs 5.6% in 2QFY10 and 4.0% in 1QFY10. And property sales normalised to RM130m, bringing YTD sales to RM620m – it is on track to hit RM800m in FY10.
Maintain BUY and RM4.35 TP. Gamuda is an excellent proxy to the Malaysian infrastructure story with the potential RM36bn MRT project doubling its RM6.5bn orderbook. It is also an ideal proxy to the long term structural boom of the property market in Vietnam. For the first time, Gamuda has also guided for property sales in Vietnam of RM820m and RM1.25bn in FY11 and FY12, respectively, offering some upside to our forecasts.
Price Target : 12-month RM 4.35
Reason for Report : Analyst briefing on MRT project
Potential Catalyst: MRT project, Vietnam sales
• More positive on RM36bn MRT project post-briefing
• 3QFY10 result was in line
• High conviction infrastructure pick with RM4.35 TP
MRT- from the horse’s mouth. Dato Lin made a rare appearance at the analyst briefing yesterday and talked extensively about the proposed RM36bn MRT project. The key takeaways are:- i) the probability of getting cabinet approval is high since it was included in the 10MP, the government has frozen land acquisition for key corridors, the MMC-Gamuda JV has started initial soil investigation and engaged foreign town planners; ii) the JV is only interested in tunneling works worth RM13-14bn, but wants to act as ‘Chariot Master’ for the other infrastructure portions. The sweetener for this is a potential share with the government for the project budget and VOP for certain cost items if there is a surplus; and iii) the JV is committed to raise RM3bn in bridging loan and RM1.8bn performance bond to finance initial works under construction. The remaining works will likely be funded by the government on a deferred payment basis. The JV hopes to have the final design by September and commence work in early 2011.
Another solid quarter. 3QFY10 result was within our and consensus expectations with net profit at RM73m (+7% q-o-q, +58% y-o-y), the strongest since the last seven quarters. 3QFY10 construction EBIT margin improved further to 6.0% vs 5.6% in 2QFY10 and 4.0% in 1QFY10. And property sales normalised to RM130m, bringing YTD sales to RM620m – it is on track to hit RM800m in FY10.
Maintain BUY and RM4.35 TP. Gamuda is an excellent proxy to the Malaysian infrastructure story with the potential RM36bn MRT project doubling its RM6.5bn orderbook. It is also an ideal proxy to the long term structural boom of the property market in Vietnam. For the first time, Gamuda has also guided for property sales in Vietnam of RM820m and RM1.25bn in FY11 and FY12, respectively, offering some upside to our forecasts.
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