• 1QFY25 earnings came in at RM200m (+7% YoY), deemed in line with expectations

• Gamuda’s sets sight on RM40-45bn order book and RM6bn property sales

• Maintain BUY rating with higher SOP derived target price of RM11.10

Broadly in line with expectations

Gamuda’s 1QFY25 core net profit came in at RM200m (+7% YoY) on the back of higher revenue of RM4.2bn (+47% YoY) driven by stronger construction (+38% YoY) and property (+82% YoY) revenue. EBITDA margin came in lower at 7.9% (-1.5ppts YoY), due to higher overseas construction contributions and lower PBT margin from the property division due to completion of Celadon City, while newer projects are still at early stages. Overall, 1QFY25 results was broadly in line with ours and consensus estimates, representing 17% of both respective full year forecasts. 1Q earnings are typically slower for the group, which have historically contributed 14-20% of annual earnings. A 5sen interim DPS was declared.

Growing capacity for DC jobs, order book to hit RM40-45bn in CY25

Gamuda’s outstanding construction order book stood at RM30bn, in line with the management’s CY24 internal target of RM30-35bn. Encouragingly, management is setting sight to bring the group’s order book to a higher level of RM40-45bn in CY25, with replenishment opportunities stemming from Penang LRT (c.RM5bn), Sabah water treatment plant, several Australia renewable projects, and potential data centre (DC) projects. Gamuda has recently expanded its capabilities to build up to 8 DC projects concurrently, indicating ample of remaining capacity beyond the 3 on-going DC projects. Meanwhile, its property segment recorded RM633m new sales (+39% YoY) in 1QFY25. Gamuda remains committed to the target of RM6bn new sales in FY25E, which will be anchored by the developments in Vietnam.

Reiterate BUY with higher TP of RM11.10

We make no changes to our earnings forecast as we deem the results to be in line with expectations. We reiterate our BUY rating with a higher SOP-derived target price of RM11.10 (from RM10.15) after raising our construction division to 25x PE (from 22x), justified by its growing capacity for DC projects, and robust pipeline of replenishment opportunities. We continue to like Gamuda for its strong execution track record in infrastructure and DC projects. Key risks to our BUY call include delays in work progress, slower contract awards, weaker-than-expected property sales and project cost overrun.

Source: Philip Capital Research - 13 Dec 2024