It said on Friday the government’s upcoming medium term recovery plan in October may serve as a prelude to the potential approval of funding for projects in the Budget 2021 tabling in November and 12th Malaysia Plan (12MP).
The High-Speed Rail (HSR) and Mass Rapid Transit Line 3 (MRT 3) will be significant projects to drive the economy from 2021 onwards and the research house expects Gamuda to have a role in both projects.
“Gamuda has been making good headway in Australia where it has been shortlisted for two sizeable projects. It has a 67% probability of winning one metro project and 33% probability of winning a motorway project.
“The most important catalyst for Gamuda and the sector is the signal from the government to pump-prime the economy. In our view, Gamuda’s strong reputation will put it in the driver’s seat to clinch key government projects such as HSR, MRT 3 and Bandar Malaysia,” it said.
AllianceDBS Research said it sum of parts (SOP)-derived TP is raised to RM4.60, which now assumes 33 sen a share from new jobs, no project delivery partner (PDP) fees and contribution from Penang Transport Master Plan (PTMP) and discounts for its toll highways and property businesses.
“Our positive outlook is a contrarian call and our earnings forecast for FY22F is above consensus. Our target price is still at the higher end. Even at a new TP of RM4.60, the stock trades at 14.9 times FY22F EPS which is below its five-year mean.
“Lower oil prices may give the government less flexibility in funding, but more off balance sheet funding and leveraging on the private sector’s balance sheet could be potential financing avenues,” it said.
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