Gamuda’s 9MFY17 results garner mixed views as construction picks up
KUCHING: Gamuda Bhd’s ( Gamuda) first nine months of financial year 2017 ( 9MFY17) results have garnered mixed views from analysts, either coming in line with estimates or lagging forecasts.
Gamuda revealed in a filing on Bursa Malaysia that for the current year to date for the period ended April 30, 2017, the recorded revenue (including share of joint venture companies’ revenue) and profit before taxaton amounted to RM4.033 billion and RM646 million respectively as compared to RM3.097 billion and RM571 million respectively in the preceding year corresponding period.
According to AllianceDBS Research Sdn Bhd (AllianceDBS Research), Gamuda’s 9MFY17 net profit of RM499 million was in line with the research house’s and consensus estimates.
On the other hand, while Gamuda’s 9MFY17 profit after tax and minority interest (PATAMI) came in higher at RM499.3 million, the group’s 9MFY17 earnings came in mixed - meeting only 61.1 per cent and 74.7 per cent of the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) and street’s expectations of full year forecasts respectively.
“Gamuda’s 9MFY17 results lagged our forecasts as we have assigned higher construction progress billings rate for the cumulative period,” MIDF Research said.
The research arm believed the FYE17 results will even out the differences.
MIDF Research pointed out that the improvement in both Gamuda’s top and bottom line was attributable to cumulative year-to- date improvements in recognition of projects i.e. KVMRT Line 2 from construction segment chalking in RM152.2 million of profit before tax ( PBT).
It was also due to the pickup in sales of properties in Celadon City, Gamuda City, (Vietnam) Jade Hills and Horizon Hills and Bukit Bantayan ( Malaysia) influences the property segment’s PBT from RM49.3m in 9MFY16 to RM107.8 million in 9MFY17.
“We have been persistent to highlight that Gamuda’s property project in Vietnam presents a healthy sales growth due to its expanding middle- class,” the research arm said.
AllianceDBS Research also noted that Gamuda’s fourth quarter of FY17 (4QFY17) property sales will be strong driven by maiden sales for Gamuda Gardens, and stronger Vietnam and Horizon Hills sales.
Hence, the research house expected FY17F property presales to surpass the group’s target of RM2.1 billion by circa 20 to 25 per cent.
AllianceDBS Research highlighted that key contract wins and earnings delivery are the most important critical factors for Gamuda.
The research house noted that there are expectations of RM10 billion of new orders per annum for current year 2017 to 2018 forecast (CY17F-18F).
“For 2017, this will largely be driven by the East Coast Railway Link ( ECRL) while for 2018 it will be the MRT Line 3.
“This will underpin a threeyear earnings compound annual growth rate (CAGR) of 13 per cent for FY16-FY19F,” AllianceDBS Research said.
The research house added that Gamuda is in the midst of formalising the group’s official guidance for property presales for FY18F which tentatively is set at RM3 billion.
On a side note, although Gamuda’s orderbook is at RM8.9 billion, MIDF Research was worried for the progress of Penang Transport Masterplan ( PTMP).
The research arm opined that it would be better for the Federal government to take over the PTMP to expedite the progress as it doubt that PTMP activities would commence in FY17 due to political impasse.