CGS-CIMB RAISES GAMUDA TARGET PRICE TO RM4.18

KUALA LUMPUR, March 29  -- CGS-CIMB Securities Sdn Bhd has raised the target price of Gamuda Bhd to RM4.18 from RM2.45 amid a strong job replenishment outlook.

In a research note today, the stockbroking firm said it resumed coverage on Gamuda with an upgrade on its recommendation to “add” from “reduce” previously.

The stockbroking firm said it believes Gamuda is shaping up to be among the larger-cap contractors, benefitting from both private sector-driven projects and recovery jobs under the 12th Malaysia Plan.

CGS-CIMB said the reclamation of Island A of the Penang South Islands project, beginning in April and taking place over six years, provided Gamuda with an immediate new order book of RM5 billion.

“We estimate RM29 billion in total addressable tenders (domestic and overseas), underpinning Gamuda’s post-COVID-19 recovery theme and improving job flows after the completion of the Klang Valley Mass Rapid Transit (KVMRT) 2 in 2022.

“We believe the odds are still favourable for the group to undertake the revised RM20 billion (estimated) MRT 3 project, which has yet to be approved,” it said.

The stockbroking firm said it also expects the RM8 billion Bayan Lepas Light Rail Transit project would be relooked at later stages as it formed part of the overall Penang Transport Masterplan infrastructure projects, in which Gamuda could participate.

CGS-CIMB said Gamuda has also been shortlisted for three packages of Australian infrastructure projects, all of which are located in Sydney.

It said of the three contracts, two are tunnelling scopes while the other is a highway construction contract.

The stockbroking firm said overall, the addressable contract tenders worth RM12 billion would come from Australia and RM17 billion from Malaysia.

Meanwhile, CGS-CIMB said political uncertainties and delays in mega contract implementation due to government funding limitations are key downside risks for Gamuda.

At 10.41, Gamuda shares gained one sen to RM3.58 with 359,700 units traded. 

-- BERNAMA