Gamuda is acquiring a 9.1-acre vacant residential and commercial land in Ho Chi Minh City, Vietnam for VND7,200bn or RM1.47bn from Tam Luc Real Estate Corporation. The shovel-ready land has an estimated GDV of RM5.1bn which is expected to be developed over the next 6 years. This transaction marks the second of Gamuda Land’s quick turnaround strategy acquisition in FY23 – the Group aimed to acquire 5 QTPs up till FY24. Including this piece of land, Gamuda owns approximately 310 acres of land area in Vietnam with a combined GDV of RM18.5bn. We are optimistic on this development as Vietnam represents c. 20% of Gamuda Land’s overall sales. Assuming a high teen pre-tax margin, we reckoned that earnings from this acquisition to contribute to Gamuda’s earnings as early as from FY25 onwards, adding 7% on average to the Group’s bottomline over a development period of 6 years. All told, we are leaving our FY23-25 earnings forecast unchanged pending deal completion in 1QFY24. Our Outperform call is affirmed with an unchanged sum-of-the-parts TP of RM5.10.
Source: PublicInvest Research - 21 Jul 2023
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