Thursday 28 Mar 2024
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KUALA LUMPUR (June 30): Gamuda Bhd's earnings visibility has improved after the builder secured the RM30 billion Mass Rapid Transit (MRT) Line 2 project in the Klang Valley, Affin Hwang Investment Bank Bhd said.

In a note today, Affin Hwang said Gamuda's construction order book had increased to RM8.2 billion after including the RM7.7 billion portion from the MRT Line 2 underground work contract.

"We believe earnings will bottom in FY16 and rebound in FY17 as the RM30 billion Klang Valley MRT Line 2 project starts to contribute earnings. Securing the project has improved earnings visibility over the six-year construction period," Affin Hwang said.

Affin Hwang's note followed the announcement on Gamuda's third quarter financials.

Yesterday (June 29), Gamuda said net profit for the third quarter ended April 30, 2016 (3QFY16) declined to RM152.69 million from RM160.43 million a year earlier. Revenue fell to RM467.29 million from RM553.78 million.

9MFY16 net profit dropped to RM474.04 million from RM528.46 million a year earlier. Revenue was lower at RM1.51 billion versus RM1.78 billion.

Today, Affin Hwang said Gamuda's 3QFY16 results are in line with the research firm's expectation. However, Affin Hwang cut its Gamuda's earnings forecast.

"We cut our earnings forecast by 3% for FY16E for lower construction and property earnings," said Affin Hwang, which, however, maintained its "buy" call for Gamuda shares with an unchanged target price of RM5.70.

At 12:30pm, Gamuda shares rose two sen or 0.4% to settle at RM4.83 for a market value of RM11.67 billion. The stock saw 802,400 shares traded.

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