Gamuda records flattish 1H, prospects still intact

KUCHING: Gamuda Bhd (Gamuda) recorded a flattish first half of the financial year 2017 (1HFY17) but analysts are still positive on its long-term prospects.

The research arm of AmInvestment Bank Bhd (AmInvestment Bank) pointed out that overall, its 1HFY17 net profit inched up two per cent year-on-year (y-o-y) as stronger construction profits were offset by lower property earnings.

It believed that Gamuda’s flattish growth was due to its conscious decision to boost sales at the expense of margins, which is by offering various incentives to buyers.

“Gamuda is the best proxy to the booming construction sector in Malaysia given its dominant role in MRT as the project delivery partner (PDP) and tunnelling contractor, and its involvement in Pan

Borneo Sarawak Highway. Its earnings visibility is strong with an outstanding construction orderbook of RM8.3 billion.

“It has booked itself a ticket to ride on the next infrastructure/ property boom in Penang via its PDP role in the PTMP –an initiative by the Penang state government to improve the road network and public transport system in Penang Island/Seberang Prai, to be funded with reclaimed land and rights to reclaim land,” it said.

It also pointed out that Gamuda has already submitted its plan for the George Town–Bayan Lepas LRT line to the Land Transport Commission (SPAD) in March 2016.

“It expects to complete the environmental and social impact assessment studies for submission to the Department of Environment in April 2017,” it added.

On Gamuda’s property sales, AmInvestment Bank noted that Gamuda’s 1HFY17 property sales more than doubled y-o-y to RM783 million (from RM385 million during 1HFY16) thanks largely to good performance from Vietnam (which made up about 40 per cent of total sales based on the research team’s estimates, with the balance 60 per cent coming from Malaysia).