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Research firms upbeat on Gamuda on better earnings prospects

30/06/2022 12:36 PM

KUALA LUMPUR, June 30 (Bernama) -- Research firms have maintained their positive calls on Gamuda Bhd on the expectation that the group would continue to deliver stellar revenue and earnings in the fourth quarter (Q4) of its financial year 2022 (Q4 FY22) and FY23. 

MIDF Research said it is positive on the construction sector, in line with the rollout of the Mass Rapid Transit 3 (MRT3) project, the impending rollout of various infrastructure projects and Gamuda’s strong foothold in Australia as it continues to clinch mega projects there. 

"We like the fact that it will continue to distribute dividends at pre-pandemic levels and we are positive on the potential sale of the group’s highway concessions, likely to be completed in August, which will see bumper dividends issued to shareholders," it said in a note today. 

Gamuda declared a second interim dividend of six sen per share, bringing its total dividend back to pre-pandemic levels of 12 sen per share, which are usually declared in Q1 and Q3 of its financial year. 

MIDF Research has maintained its 'Buy' recommendation for the stock with a target price (TP) of RM4.02 per share. 

Meanwhile, Public Investment Bank Bhd has adjusted Gamuda’s FY22 earnings forecast upwards by 9.1 per cent, in view of stronger property contribution, particularly from Vietnam, and better contributions from the domestic construction segment with profitability improving due to relief contingencies for the MRT 2 project.

"Our 'Outperform' rating is maintained with a revised sum-of-parts derived TP of RM3.94 from RM4.09 previously," it said. 

Another research firm, CGS-CIMB Securities Sdn Bhd also retained its 'Add' call for Gamuda with a higher TP of RM4.35 versus RM4.25 previously.

It said the group's outstanding order book at a new all-time high of RM12.4 billion was largely dominated by projects in Australia (RM8.5 billion). 

Overseas order book, including Taiwan and Singapore, accounts for 86 per cent of the total outstanding order book.

The RM12.4 billion order book would provide earnings visibility for three to four years up to FY27/26 for the group.

Upside risks to its call include more domestic and overseas job wins while downside risks were project delays.  

As at 11.56 am, Gamuda's share price was up 14 sen to RM3.56 with 2.93 million shares transacted. 


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