KUALA LUMPUR: Gamuda Bhd is expected to be one of the major beneficiaries for the tunnelling and underground portion of the Mass Rapid Transit Line 3 in the second half (2H) of 2021.
MIDF Research analyst Khoo Zhen Ye said Gamuda is expected to double its order book to about RM9.9 billion from the current RM4.9 billion as of April this year, with the additional RM5 billion worth of reclamation works of Penang South Island Island A, which is expected to start in August.
Gamuda's joint-venture (JV) with Laing O'Rourke is likely to be a successful bidder for the Sydney Metro West project.
"The company's JV is one of three bidders with a potential win for one of the two tunnel packages under the project worth about RM5.0 billion, which could be awarded in late 2H of 2021 or early first quarter of 2022," he said in a research note today.
Gamuda has also been shortlisted for Western Sydney Airport Metro's tunnelling works worth about RM5.0 billion.
"Gamuda has a higher likelihood of clinching the tunnelling deal as well, premised on that it is the only contender with a local JV partner (John Holland) and its extensive experience in tunnelling projects such as the completed Smart tunnel project in Kuala Lumpur," Khoo said.
MIDF Research has revised downward its FY21 earnings forecast for Gamuda to RM525.0 million, taking into account the effects of lower progress billings and margin contraction in the property segment caused by the full Movement Control Order, while maintaining its FY22 estimates.
The firm has maintained a target price of RM4.20 for Gamuda, pegging an unchanged price-earnings ratio of 16 times to the company's FY22 earnings per share of 26.3sen.
"The premium is justified given Gamuda's solid order book, encouraging prospects of job replenishment rate on overseas and domestic contracts for public infra projects, and a sound balance sheet."
Meanwhile, Public Investment Bank Bhd adjusted Gamuda's FY21 to FY22 earnings forecast lower by 6.3 per cent on average to incorporate lower recognition from domestic property billings and lower traffic volume for its highways.
"Our target price is adjusted from RM3.77 to RM3.68 per share after the revision. This is because recent share price weakness appears to have priced in the expected challenges in the forthcoming fourth quarter of 2021," it said in a research note today.