Gamuda Singapore, a wholly owned subsidiary of Gamuda Bhd, made a joint bid of S$318.89mil (RM963mil) for the tract earmarked for executive condominium development .
KUALA LUMPUR: Infrastructure-property Gamuda Bhd
’s core net profit for the financial year ended July 2018 (FY7/18) was 15% above CIMB Equities Research’s full-year forecast and 9% above consensus.
The research house said on Monday Gamuda recognised RM304.5mil impairment from the water deals (sold 40% stake in Syarikat Pengeluar Air Sungai Selangor (Splash) and receivables haircut for 80%-owned Gamuda Water).
The construction segment’s pre-tax profit surged by 37% on-year (peak billings); property earnings beat its RM3.5bil sales target by RM90mil.
“FY7/18 core net profit grew 17% on-year. Full-year DPS of 12 sen was in line,” it said.
CIMB Research said Gamuda’s construction division’s 37% on-year growth in FY7/18 pre-tax profit could have been stronger if not for the 22% on-year drop in its 4QFY7/18’s pre-tax profit due to the timing of progress billings.
Gamuda expects the pace to regain momentum in FY7/19, supported by its RM6bil order book (MRT 2 constitutes 92%). The RM6bn order book is set to deplete substantially over the next 12 months due the sector’s downturn.
However, the property development segment’s pre-tax margin grew by 2% pts in FY7/18 from 8% in 9MFY7/18.
The group said margins for both local and international projects bottomed out in 3QFY7/18.
The Gamuda Cove development in Dengkil, Selangor, has generated strong pre-launch interest, the group said. It aims to generate sales of RM4bil in FY7/19 and RM4.5bil in FY7/20, or up by 11.4%-12.5% on-year over the next two years.
“Despite the strong core earnings in FY18, we reduce FY19-20F EPS by 14-27% as we reflect the 1) removal of Splash’s earnings of about c.RM100m p.a., 2) lower water earnings from the revised O&M contract for 80%-owned Gamuda Water, and 3) cut in construction pre-tax margin to 8-9% from 10-12%.
“Any downside from MRT 2 cost rationalisation is likely to be offset by better property development earnings in FY19-21F.
“We cut TP (unchanged 40% RNAV discount) as we 1) factor in higher borrowings during FY18, 2) exclude the project delivery partner discounted cashflow value for MRT 2, and 3) roll over our valuations to end- CY19F, during which we assume zero contract wins and lower construction margins. Upside risk is a revival of the MRT 3 (Circle Line) and High Speed Rail projects. Maintain Reduce,” said CIMB Research.
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