MIDF Research maintains Buy on Gamuda, raises target price

MIDF Research maintains Buy on Gamuda, raises target price
Business & Markets 2013
Written by theedgemalaysia.com
Friday, 27 September 2013 09:57

KUALA LUMPUR (Sept 27): MIDF Research has maintained its Buy rating on GAMUDA BHD [] at RM4.59 with a higher target price of RM5.24 (from RM4.71) and said the company’s FY13 results within were expectation.

In a note Friday, the research house said Gamuda’s KVMRT1 progress to ramp up in FY14 and FY15, adding that works on underground package was 18% completed and expect speedier progress in FY14 and FY15 by approximately 25% each.
All 10 tunnel boring machines have been delivered. Of those, 4 machines have commenced tunneling works while 2 more machines shall begin tunneling in the next 2 months, it said.
MIDF Research said that as the government had decided to proceed with KVMRT 2 and 3, the formal approval was expected to be announced by this year end.
The research house said Gamuda was targeting the same dual-role involvements in KVMRT 2, i.e. the main turnkey contractor for underground package and PDP for elevated works.
“We also anticipate the Southern Double Track project will see a clearer picture after China’s Prime Minister visit in early October.
“Gamuda’s outstanding orderbook currently stands at RM3.5b, largely from tunnelling portion of the KVMRT1. The outstanding orderbook should sustain Gamuda’s earnings until 2017,” it said.
“We are revising our FY14 earnings higher by 7% and introduce FY15 figures. Hence, we reaffirm our Buy recommendation on Gamuda with a revised target price of RM5.24,” it said.