Gamuda - Record FY12 profits, now what’s next? HOLD

-  Maintain HOLD on Gamuda with an unchanged fair value of RM3.79/share. Gamuda’s FY12 results fell within both consensus and our expectations. Its record FY12 net profit rose 29% YoY mainly on stronger contributions from both its construction and property divisions.

-  We have also introduced FY15F net profit of RM728mil, implying an earnings growth of 9%. No final dividend was declared. 

-  Full-year earnings could have been higher if not for a one- off adjustment in amortisation expenses for 46%-owned Litrak following a review of its traffic forecast for the remaining concession period. 

-  Construction earnings rose 55% YoY on better recognition from the Ipoh-Padang Besar Double Tracking project (86% completed). Construction margins jumped from 7.8% in FY11 to 11.7%. 

-  The group’s outstanding order book stood at RM4.8bil with contributions from the Sg.Buloh-Kajang (SBK) MRT project picking up with an overall progress of 7%. 

-  For the tunnelling portion under the MMC-Gamuda JV, the first two pairs of tunnel boring machines (TBM) are due to be delivered at Pasar Rakyat and Semantan portal. The launch shaft works are well underway at both the north and south portals.

-  Gamuda expects a firm decision on the second MRT line to pan out between the next two and three quarters. To ensure sufficient construction capacity, any new lines will likely take up to two years to be fully ramped-up, i.e. by end-2014 assuming a decision can be made by yearend/early-1Q13.

-  As the Project Delivery Partner (PDP) for the SBK line, Gamuda is also gearing up for a similar role in any of these new lines – if this method is chosen.

-  Beyond MRT, Gamuda will likely put in a bid for the Langat 2 project (RM3.6bil) and is exploring opportunities in Indonesia and Myanmar. However, we do not envisage any significant newsflow in the near term.   

-  Gamuda achieved higher new property sales of RM1.5bil (+16% YoY) – albeit partly aided by land sale gains at Celadon City to Aeon. 

-  But, we have toned down our expectations moving into FY13F and assumed flattish new sales – lower than management’s own lowered forecast of RM1.7bil, as overall sales momentum have slowed since 2HFY12 while the Vietnamese market remains soft.

Source: AmeSecurities