Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (June 27): Analysts see bright prospects ahead for Gamuda Bhd as the group is expected to be the front-runner for the tunnelling works for the Klang Valley Mass Rapid Transit Line 2 (KVMRT2) project.

Yesterday, the group reported net profit of RM177.9 million for its third quarter ended April 30, 2014, soaring 149% year-on-year from RM71.4 million while revenue slipped 1.1% y-o-y to RM633.8 million from RM641.1 million.

For the nine-month period, net profit chalked RM513.5 million versus RM373.7 million in the previous period, while revenue recorded RM1.64 billion from RM1.59 billion a year ago.

But at 3.43 pm, Gamuda was traded at RM4.71, down 1 sen or 0.2% with some 2.9 million shares done. The stock had risen sharply in the recent past.

In its update report today, Kenanga Investment Bank Bhd has maintained “outperform” on the group, with a higher target price (TP) of RM5.52 and said that its job prospects stay bright with KVMRT2.

The management of Gamuda said that the project has started its preliminary works, while the fine-tuning of the railway track’s alignment is ongoing.

“As we expect the tender will out by end of next year, we reaffirm our view that MMC-Gamuda JV will still be the tunnelling contractor and the PDP (project development partner) for the project,” said the research house.

Kenanga estimates the tunnelling portion of the project to cost RM10 billion, out of the total poject cost of RM25 billion.

“Hence, Gamuda will replenish its orderbook by at least another RM5.0 billion by early-mid FY16,” it said.

MIDF Research also viewed Gamuda positively, upgrading its call on the stock to “buy” from “neutral” while also raising its TP to RM5.28 from RM4.88.

The research house said it was overall positive on the group due to its outstanding orderbook of more than RM2 billion, potential orderbook replenishment from the Southern Double Track project in 2014 and the KVMRT2 in 2016, and also its strong unbilled property sales of RM1.8 billion.

“We expect the official announcement for KVMRT Line 2 will be made by end of this year. Meanwhile, the tendering is expected to be called by 2H2015 with initial awards to follow in 1H2016,” wrote MIDF in a note today.

Similarly, CIMB Research had also raised its TP on Gamuda to RM5.65 from RM5.21 while maintaining its “add” rating on the stock, saying that Gamuda continues to be the potential beneficiary of KVMRT2.

“Its current outstanding orderbook of RM2.3bn could more than triple to over RM7bn with the new underground MRT works,” said the research house.

The KVMRT2 will link Sungai Buloh to Putrajaya via a total of 35 stations. The total length of the line is approximately 56km, whereby 11km of the line is located underground.

      Print
      Text Size
      Share