KUALA LUMPUR: Gamuda Bhd
's announcement of a marine bridge contract worth NTD3,955mil (RM522mil) is an important win for the group, says AllianceDBS research.
In a research note, AllianceDBS said Gamuda is taking a proactive stance to extend its reach overseas with the changing domestic construction landscape.
It added that Gamuda is understood to be bidding for other tenders in Taiwan.
However, the contract's uplift to earnings would be minimal, given Gamuda's effective 70%, RM365mil stake in the project will only lift its orderbook by about 4% to RM10.8bil.
"Assuming pretax margins of 5-6%, the potential uplift to earnings would also be minimal at below 3%," it said.
The contract from state-owned CPC Corporation Taiwan was secured by Gamuda's 70% owned joint venture with Dong-Pi Construction Co Ltd, and involves the construction of a 1.23km marine bridge connecting a receiving terminal to a man-made island.
The contract is for 44 months commencing April 2019, and is expected to be completed in November 2022.
The research house maintained its buy rating on Gamuda with an unchanged target price of RM3.50.
Limited time offer:
Just RM5 per month.
