PETALING JAYA: Gamuda Land, the property arm of Gamuda Bhd
, has the ability to continue to benefit from growth in the property and infrastructure sectors in Vietnam, analysts say.
This will be backed by strong demand, limited supply of new property in the market, and the group’s foresight in terms of acquiring land in upcoming prime areas, said MBSB Research.
Following a recent visit to Gamuda Land’s operations in Vietnam, the research house said it has renewed optimism on the company’s projects there.
Note that in a move to streamline governance for sustainable growth, Vietnam’s government, under leader To Lam, approved a provincial merger plan effective July 1, which saw a total of 63 provinces. being reduced to 34, with an aim to push for regional growth.
There was also a major overhaul to a two-tier model under the central government, which saw the removal of the district level of administration.
MBSB Research said: “We reckon that the reduction in red tape and improved administrative efficiency bodes well for Gamuda’s strategy of quick turnaround projects in Vietnam.”
Gamuda Land has six projects in Vietnam, five in the greater Ho Chi Minh City (HCMC) area and one in Hai Phong City.
“These projects carry a total gross development value of US$2.2bil,” the research house noted.
As Gamuda Land has almost completed all its projects, MBSB Research said the focus for the next six months is on new projects that fit into its product offerings of mid-range high rise and premium high rise homes and landed property.
MBSB Research said the developer’s management has guided that they have three to five deals in the pipeline that are currently at the negotiation stage.
Among the main considerations for Gamuda Land’s land acquisition exercise in Vietnam is the upcoming direction of HCMC’s key infrastructure developments.
These include the expansion of National Highway 13, Ring Road 3, Long Thanh International Airport, the commencement of the Cat Lai and Dong Nai 2 bridges, and transit-oriented developments by 2030.
MBSB Research said Gamuda is also studying the potential opportunities for entry, especially in the development of mass rapid transit (MRT) lines, with one in Hanoi and two in HCMC.
“We understand that the three MRT lines would involve a significant underground portion, something that is right up the alley of Gamuda Engineering, which is renowned as a tunnelling expert.”
Similar to its strategy in Australia, the research house said it believes Gamuda may seek strong partnerships to diversify some of the risks.
“We also do not discount the possibility of a public-private partnership strategy involving land swaps,” it added.
MBSB Research has a “buy” call on Gamuda with an unchanged target price of RM6.35.
“Gamuda remains our top pick for the construction sector, sitting on an all-time high order book of RM39.3bil and a geographically diversified portfolio for both construction and property,” it noted.
Gamuda is also rapidly expanding its footprint in the utilities space, leveraging its expertise in construction and its financial strength to undertake asset ownership in a bid to rebuild its recurring income stream, which it enjoyed before exiting the toll concession business in 2022.
