CGS-CIMB Research has raised its earnings per share estimates for Gamuda by 17.6% and its target price to RM4.35 on the strong 3Q ended April 30, which was helped by a robust performance from the company’s property business in Vietnam, the Caledon City project, and tail-end profit (cost savings) from the MRT2 project it is executing. (File pic shows Gamuda tunnelling works)
PETALING JAYA: Gamuda Bhd
’s strong third-quarter (3Q) results have beaten analyst expectations, leading to a revision of its financial year 2022 (FY22) estimates and target price by analysts.
CGS-CIMB Research has raised its earnings per share estimates for Gamuda by 17.6% and its target price to RM4.35 on the strong 3Q ended April 30, which was helped by a robust performance from the company’s property business in Vietnam, the Caledon City project, and tail-end profit (cost savings) from the MRT2 project it is executing.
“This led to a 5.6% quarter-on-quarter rise in the 3Q earnings before interest, taxes, depreciation and amortisation or Ebitda margin to 20.1%.
The nine-month (9M22) Ebitda margin was at 17.1%, higher than our forecast FY22 of 12%.
“The 9M22 results were above expectations; core net profit of RM544.4mil came in at 85% of our and consensus full-year estimates,” CGS-CIMB noted.
Gamuda’s 3Q22 core net profit surged 56% year-on-year (y-o-y) and 25% quarter-on-quarter (q-o-q), while the 9M22 core net profit rose 46% y-o-y.
Gamuda, in its conference call with analysts yesterday, has guided that it expects its 4Q core net profit to be equally strong, driven by its overseas and domestic property business.
The diversified group revealed that the sale of its highway assets for RM5.5bil to Amanat Lebuhraya Rakyat could be completed by late August with an EGM to secure shareholders’ approval, which is likely to be held in mid-July 2022.
“Gamuda will pay out RM1bil in special dividends, which is 43% of the total RM2.3bil proceeds from the highway deal, or 38 sen a share at an 11% dividend yield, on top of the normal dividend of 12 sen per annum,” CGS-CIMB said.
The sale of the highways will result in Gamuda having a net cash position, while future group earnings will exclude some RM170mil to RM180mil in total highway profit contribution.
The earnings vacuum left by the sale of the highway assets will be partially filled by a substantial rise in construction billings on its all-time high construction order book, robust unbilled property sales of RM5.4bil as at end-April 22 and by some RM4bil in property sales targeted by end-FY22.
CGS-CIMB added that Gamuda was on track to achieve RM1.3bil in property sales in 4Q22, driven by the Gamuda Gardens and Gamuda Cove townships projects and other quick turnaround projects.
Kenanga Research, in a report yesterday, noted that Gamuda has guided for stronger replenishment of RM25bil (from RM20bil) in new contract wins spread across its FY22 and FY23 period.
Its year-to-date contract wins amounted to RM9.5bil, which takes its current construction order book size to RM12.4bil.
Kenanga has raised Gamuda’s FY23 replenishment to RM12.5bil (from RM7.5bil), in line with the new guidance.
