MIDF Research is optimistic about Gamuda Bhd’s earning outlook, premised on the latter’s stellar order book and its strong overseas presence which now accounts for almost half of the group’s bottom line.
In a note today, MIDF Research shared that Gamuda’s third quarter of financial year 2023 (3Q FY2023) core net profit grew 12.1 per cent year-on-year (y-o-y) to RM223.3 million on the back of improving contributions from its overseas projects.
For the nine-month period ended April 2023, the group’s core net profit surged 24.9 per cent y-o-y to RM607.7 million, which came in within the research house’s expectations.
It noted that about 44 per cent of Gamuda’s core earnings came from its overseas operations.
“Gamuda is set to make greater strides in Australia, where it has just completed the acquisition of Downer Transport Projects (DTP), which was a division within the Downer Group, specialising in rail.
“We also like that the company remains the front-runner of Mass Rapid Transit line 3 (MRT3) largest underground package and that it plans to take it a step further by bidding for the systems package.
“While there could be a delay in the rollout of MRT3, it would have minimal impact on Gamuda which already has a vast number of jobs under its wing, on top of its capability to secure even more projects,” MIDF said.
As such, the research house has maintained its ‘buy’ call on Gamuda, with an unchanged target price (TP) of RM5.04 per share.
Hong Leong Investment Bank Bhd (HLIB) also maintained its ‘buy’ rating on Gamuda, with a slightly higher TP of RM4.92 from RM4.88 previously as the company’s result surpassed its expectations.
In a separate note, it expected Gamuda to close FY2023 on a high, with better sequential performance in 4Q 2023, driven by construction kicking into higher gear, consolidation of its wholly-owned Australian sub-subsidiary DT Infrastructure Pty Ltd (DTI) as well as unbilled sales which stood at RM5.7 billion.
“The group’s unbilled orderbook stands at RM21.5 billion, inclusive of its Silicon Island Phase 1 (Island A) reclamation contract worth RM3.5 billion and immediately injectable DTI contracts of RM4.5 billion,” it said.
Meanwhile, Kenanga Research maintained its ‘outperform’ call on Gamuda with a TP of RM5.15 per share.
“We continue to like Gamuda for being the front-runner for the tunnelling job for MRT3 and its job wins in Australia and Singapore that speaks eloquently for its competitiveness in the international market.
“The company also has a strong balance sheet after the disposal of its toll highways, with its strong earnings visibility underpinned by a robust outstanding order book of RM21.5 billion, as well as its efforts to expedite growth in the renewable energy space in line with global sustainability goals,” Kenanga said.
At 10.20am, Bumi Armada’s shares rose by 13 sen to RM4.38 sen per unit, with 4.95 million shares traded.
