Credit Suisse: Gamuda could be positively re-rated if BN wins

Credit Suisse: Gamuda could be positively re-rated if BN wins
Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Tuesday, 23 April 2013 15:21


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KUALA LUMPUR (April 23): Credit Suisse opined that infrastructure company GAMUDA BHD [] could enjoy a positive re-rating if the Barisan Nasional (BN) wins the coming 13th general election (GE13).

“Its order flow outlook hinges on the outcome of the GE13 on 5 May 2013, and in the probable event that the current ruling party retains political control, we believe Gamuda could be positively re-rated,” said Danny Goh, analyst with Credit Suisse, in a note.

On Gamuda’s recent announcement that the group had lost two arbitration cases, which will cost it a total sum of RM119 million, Goh said:

“We have revised down our FY2013 net profit estimate by 18% to factor in the impact of these one-off costs. But we have not changed FY14-15 net profit estimates and our target price of RM4.50.

“From our discussion with its IR (industrial relations), we understand that there are no further cases pending that could expose the group to further claims.”

Goh said these one-off costs do not de-rail his investment thesis on Gamuda.

“We remain positive on the stock and reiterate our OUTPERFORM rating as we believe the outlook for CONSTRUCTION [] order flow remains promising.”