KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) expects Gamuda Bhd to continue its firm earnings recovery given the high vaccination rate in Malaysia and the reopening of economic sectors.
PublicInvest said Gamuda's outstanding orderbook remained solid at RM4.5 billion, providing an earnings visibility for the next two years.
"The group's prospects remain exciting being the potential early major beneficiary of the impending MRT3 roll-out, anticipated Australian project win, as well as its foray into United Kingdom properties to lift its property division's return on equity (ROE)," it said in a report today.
Gamuda posted a net profit of RM214.1 million for the fourth quarter ended July 31, 2021, compared to a loss of RM12.5 million in the same quarter last year, amid stronger construction and property earnings as work on all fronts picked up pace on the back of rigorous Covid-19 control measures.
PublicInvest deems the bumper Q4 results as a positive surprise, primarily driven by resilient construction and property division performance.
This boosted Gamuda's cumulative financial year 2021 (FY21) earnings to record higher growth of 12.1 per cent to RM588.3 million despite the various movement control orders (MCO), which restricted work progress in Malaysia.
"The group's FY21 results are above our and consensus estimates, exceeded by 25 per cent and 20 per cent of full-year forecasts respectively.
"We are maintaining our earnings forecasts for FY22 and FY23 at this juncture, as the lumpy earnings in Q4 2021 from the progress billing of MRT2 and Celadon City is expected to normalise for coming quarters albeit remains healthy," it said.
PublicInvest expects Gamuda concession's division to be on strong earnings recovery mode moving forward, despite the weaker earnings in the financial year 2021 (FY21).
This is mainly premised on the quick return of traffic in LDP and Kesas.
"Likewise, Sprint has seen volumes rise from 25 per cent to 65 per cent and SMART from 10 per cent to 50 per cent of pre-MCO level. The recent government's announcement of 100 per cent back to office further supports our thesis that concessions earnings will recover in coming quarters."
PublicInvest maintains its "Outperform" call on Gamuda with an unchanged target price of RM3.68 given the 21.8 per cent upside to our valuation.