GAMUDA (5398) : Gamuda - Throwing up value
Target RM5.99 (Stock Rating: ADD)
Though Gamuda's annualised 1QFY7/15 core net profit was 3% above our full-year forecast and 12% above consensus, we consider the results to be broadly in line due to the winding down of MRT1 construction profits and a softer property market outlook, supported by concession earnings. Investors should look forward to newsflow on the Penang transport infra, positive progress on the water deal and the MRT 2 execution. These could be catalysts for the stock which is down 9% from its 52-week high, triggered by the perceived negatives from the fallen oil price. This should offset the negative domestic property outlook. Our target price remains pegged to a 10% RNAV discount. Maintain Add. Gamuda remains our top pick in the big-cap space.
1Q15 broadly in line
The annualised 1Q15 core net profit was 3% above our full-year forecast and 12% above consensus. This was broadly in line as future quarters should reflect the winding down of MRT earnings and weaker domestic property sales. The performance of the construction division should be relatively stable in the following quarters at an effective c.7% pretax margin, inclusive of the PDP earnings. 1Q15 property presales of RM240m represent a decline of 58% yoy, dragged by the slowdown in Iskandar, which was not totally unexpected. There is downside risk to management's RM1.6bn domestic property sales target for FY15, but it should be partially mitigated by the still-healthy RM1.5bn unbilled sales as at 1Q15. The 6 sen interim single-tier DPS was in line.
Still looking good for 2015
The main positives from the results briefing were: 1) execution of MRT 2 should be in full swing from 2015 with the signing of the project delivery partner (PDP) terms (likely at 6%), alignment display and prequalification and tender phase. Awards are targeted for early-2016. A slight concern was the timing of the new MRT profits, which could put pressure on FY16 numbers, but we leave our forecasts unchanged at this juncture. 2) Management remained optimistic about its prospects in the RM27bn Penang transport infra job, with more visibility expected following the request for proposal (RFP) in mid-2015.
The stock is down 9% from the peak
The share price offers a good re-entry point, in our view. A potential bright spot in the medium term is the successful divestment of Splash at a better price.
Source: CIMB Daybreak - 17 December 2014
Target RM5.99 (Stock Rating: ADD)
Though Gamuda's annualised 1QFY7/15 core net profit was 3% above our full-year forecast and 12% above consensus, we consider the results to be broadly in line due to the winding down of MRT1 construction profits and a softer property market outlook, supported by concession earnings. Investors should look forward to newsflow on the Penang transport infra, positive progress on the water deal and the MRT 2 execution. These could be catalysts for the stock which is down 9% from its 52-week high, triggered by the perceived negatives from the fallen oil price. This should offset the negative domestic property outlook. Our target price remains pegged to a 10% RNAV discount. Maintain Add. Gamuda remains our top pick in the big-cap space.
1Q15 broadly in line
The annualised 1Q15 core net profit was 3% above our full-year forecast and 12% above consensus. This was broadly in line as future quarters should reflect the winding down of MRT earnings and weaker domestic property sales. The performance of the construction division should be relatively stable in the following quarters at an effective c.7% pretax margin, inclusive of the PDP earnings. 1Q15 property presales of RM240m represent a decline of 58% yoy, dragged by the slowdown in Iskandar, which was not totally unexpected. There is downside risk to management's RM1.6bn domestic property sales target for FY15, but it should be partially mitigated by the still-healthy RM1.5bn unbilled sales as at 1Q15. The 6 sen interim single-tier DPS was in line.
Still looking good for 2015
The main positives from the results briefing were: 1) execution of MRT 2 should be in full swing from 2015 with the signing of the project delivery partner (PDP) terms (likely at 6%), alignment display and prequalification and tender phase. Awards are targeted for early-2016. A slight concern was the timing of the new MRT profits, which could put pressure on FY16 numbers, but we leave our forecasts unchanged at this juncture. 2) Management remained optimistic about its prospects in the RM27bn Penang transport infra job, with more visibility expected following the request for proposal (RFP) in mid-2015.
The stock is down 9% from the peak
The share price offers a good re-entry point, in our view. A potential bright spot in the medium term is the successful divestment of Splash at a better price.
Source: CIMB Daybreak - 17 December 2014
