Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: MIDF
Gamuda Bhd
(March 22, RM3.70)
Maintain buy at RM3.66 with target price RM4.68: We are projecting 7.5% growth in construction's contribution for 2011'' gross domestic product (GDP) which could exceed the average yearly construction turnover of RM60 billion. The construction sector grew 5.7% in 2009 and 7% in 2010.
Profit in FY11 is forecast to grow by 19% year-on-year (y-o-y), but there is ample room for it to exceed our target as more job rollouts are expected in the future. In terms of margins, we are looking an improvement in gross margins y-o-y to12% from'' 9% in 1Q10. We expect this scenario to prevail for the remainder of FY11. ''
The'' RM5.5 billion includes'' RM1.8 billion for the Nam Theun I project which is yet to be finalised. The double tracking'' project is reportedly at'' 54% (as at December 2010) with a completion target at end-2013 (after a one-year extension).
Property division sales are improving by 20% y-o-y and things are looking up with the group on track to achieve its target'' of'' RM1 billion in sales. On the downside, the maiden launch of the Yen So park project in Hanoi has been deferred to July 2011 from April with a RM400 million launch value target.'' ''
Work on the mass rapid transit system (MRT) is targeted to start in July 2011, if everything goes as planned and all approvals are obtained from the authorities. The Gamuda-MMV JV has been appointed the project delivery partner (PDP) for the MRT project with the pre-qualification process beginning this month.
Its only exposure in the Middle East is in Qatar, the New Doha International Airport, which is nearing completion. Another notable project was the Sitra Bridge in Bahrain that has since been completed.
The long overdue Selangor water saga is still in stalemate. We believe no decision will be made anytime soon, at least after the general election.
Steel prices are on the rise (6% year-to-date), in tandem with the rise in global metal prices that could pose a threat to margins going'' forward. As for Gamuda, we expect impact to be minimal. As for the Vetnam dong'' (-7.4% YTD against the'' ringgit), the devaluation will impact contributions from its Vietnam ventures.
We maintain our'' target price of RM4.68 but overall optimism'' is supported by: (i) improvements in earnings and margins;'' (ii) the high likelihood of secure the tunnelling portion of the MRT project; and (iii) contributions from property ventures. The pullback on construction stocks should open up trading opportunities in the near-term. ' MIDF Research, March 22
This article appeared in The Edge Financial Daily, March 23, 2011.
Company Name: GAMUDA BHD
Research House: MIDF
Gamuda Bhd
(March 22, RM3.70)
Maintain buy at RM3.66 with target price RM4.68: We are projecting 7.5% growth in construction's contribution for 2011'' gross domestic product (GDP) which could exceed the average yearly construction turnover of RM60 billion. The construction sector grew 5.7% in 2009 and 7% in 2010.
Profit in FY11 is forecast to grow by 19% year-on-year (y-o-y), but there is ample room for it to exceed our target as more job rollouts are expected in the future. In terms of margins, we are looking an improvement in gross margins y-o-y to12% from'' 9% in 1Q10. We expect this scenario to prevail for the remainder of FY11. ''
The'' RM5.5 billion includes'' RM1.8 billion for the Nam Theun I project which is yet to be finalised. The double tracking'' project is reportedly at'' 54% (as at December 2010) with a completion target at end-2013 (after a one-year extension).
Property division sales are improving by 20% y-o-y and things are looking up with the group on track to achieve its target'' of'' RM1 billion in sales. On the downside, the maiden launch of the Yen So park project in Hanoi has been deferred to July 2011 from April with a RM400 million launch value target.'' ''
Work on the mass rapid transit system (MRT) is targeted to start in July 2011, if everything goes as planned and all approvals are obtained from the authorities. The Gamuda-MMV JV has been appointed the project delivery partner (PDP) for the MRT project with the pre-qualification process beginning this month.
Its only exposure in the Middle East is in Qatar, the New Doha International Airport, which is nearing completion. Another notable project was the Sitra Bridge in Bahrain that has since been completed.
The long overdue Selangor water saga is still in stalemate. We believe no decision will be made anytime soon, at least after the general election.
Steel prices are on the rise (6% year-to-date), in tandem with the rise in global metal prices that could pose a threat to margins going'' forward. As for Gamuda, we expect impact to be minimal. As for the Vetnam dong'' (-7.4% YTD against the'' ringgit), the devaluation will impact contributions from its Vietnam ventures.
We maintain our'' target price of RM4.68 but overall optimism'' is supported by: (i) improvements in earnings and margins;'' (ii) the high likelihood of secure the tunnelling portion of the MRT project; and (iii) contributions from property ventures. The pullback on construction stocks should open up trading opportunities in the near-term. ' MIDF Research, March 22
This article appeared in The Edge Financial Daily, March 23, 2011.
No comments:
Post a Comment