GAMUDA (5398) - Gamuda - Transition to bigger things
Target RM6.20 (Stock Rating: ADD)
Gamuda's annualised 1HFY7/15 core net profit was 2% above our full-year forecast and 11% above consensus. We deem the results broadly in line, as 2H15 will be dragged by weaker property sales but offset by MRT profits. We are not too negative on the 3-to 6-month delay in MRT 2, given the alignment changes. And we are encouraged by the earlier mid-2015 timing of the decision on the PDP for the RM27bn Penang PTMT. We maintain our FY15 EPS forecast, as we expect FY15 to be another record year but cut FY16-17 EPS for slower property sales. We raise our target price, still pegged to a 10% RNAV discount, as we update for balance sheet items. Maintain Add, with the MRT 2, Penang PTMP and Splash sale resolution as catalysts.
1H15 net profit broadly in line
Annualised 1H15 core net profit was 2% above our full-year forecast but 11% ahead of consensus estimates. The performance was broadly in line, as we expect slower property sales in 2H15 due to the post-GST effect and sustained slowdown in Iskandar. Construction earnings should partially mitigate the drag from property, as progress billings for the MRT 1 underground works should accelerate 2Q15. Construction blended pretax margin stood at 8% in 1H15, which is in line with our expectations, as it reflects the higher proportion of profits from the 6% project development partner (PDP) fees. No dividends were declared, which was expected.
Aiming for another record year
The key negative takeway from the results briefing was the over 30% cut in management's FY15 property sales target to RM1.2bn. This is slightly lower than our property sales forecast of RM1.4bn, as we expect the Klang Valley launches to slightly buck the trend, supporting modest recovery in Vietnam sales. Nevertheless, overall earnings outlook in FY15 appears buoyant, with signs of a stronger sales momentum for construction as the financial progress of the underground works for MRT 1 is now at 64%.
Potential catalysts in 2H15
We believe that fresh catalysts from the RM27bn Penang PTMP could emerge from mid-2015. New guidance that the decision on the PDP may be announced earlier in mid-2015 is good news, as this could offset the slight delay in MRT 2. Renegotiations on the divestment of 40%-owned Splash with a workable solution in 2H15 is another key catalyst. Gamuda remains our top big-cap pick.
Source: CIMB Daybreak - 27 March 2015
Target RM6.20 (Stock Rating: ADD)
Gamuda's annualised 1HFY7/15 core net profit was 2% above our full-year forecast and 11% above consensus. We deem the results broadly in line, as 2H15 will be dragged by weaker property sales but offset by MRT profits. We are not too negative on the 3-to 6-month delay in MRT 2, given the alignment changes. And we are encouraged by the earlier mid-2015 timing of the decision on the PDP for the RM27bn Penang PTMT. We maintain our FY15 EPS forecast, as we expect FY15 to be another record year but cut FY16-17 EPS for slower property sales. We raise our target price, still pegged to a 10% RNAV discount, as we update for balance sheet items. Maintain Add, with the MRT 2, Penang PTMP and Splash sale resolution as catalysts.
1H15 net profit broadly in line
Annualised 1H15 core net profit was 2% above our full-year forecast but 11% ahead of consensus estimates. The performance was broadly in line, as we expect slower property sales in 2H15 due to the post-GST effect and sustained slowdown in Iskandar. Construction earnings should partially mitigate the drag from property, as progress billings for the MRT 1 underground works should accelerate 2Q15. Construction blended pretax margin stood at 8% in 1H15, which is in line with our expectations, as it reflects the higher proportion of profits from the 6% project development partner (PDP) fees. No dividends were declared, which was expected.
Aiming for another record year
The key negative takeway from the results briefing was the over 30% cut in management's FY15 property sales target to RM1.2bn. This is slightly lower than our property sales forecast of RM1.4bn, as we expect the Klang Valley launches to slightly buck the trend, supporting modest recovery in Vietnam sales. Nevertheless, overall earnings outlook in FY15 appears buoyant, with signs of a stronger sales momentum for construction as the financial progress of the underground works for MRT 1 is now at 64%.
Potential catalysts in 2H15
We believe that fresh catalysts from the RM27bn Penang PTMP could emerge from mid-2015. New guidance that the decision on the PDP may be announced earlier in mid-2015 is good news, as this could offset the slight delay in MRT 2. Renegotiations on the divestment of 40%-owned Splash with a workable solution in 2H15 is another key catalyst. Gamuda remains our top big-cap pick.
Source: CIMB Daybreak - 27 March 2015
