KUALA LUMPUR: Kenanga Research has lowered its earnings projection on Gamuda Bhd in anticipation of a weaker final financial quarter following its recent disappointing earnings result.
In 3QFY21, Gamuda’s core net profit of RM142mil brought year-to-date core net profit to RM374mil, which came to 70% and 69% of Kenanga’s and consensus full-year estimates.
“This is deemed below our expectation as we expect the MCO 3.0 and FMCO imposed in May and June to affect its construction and property progress billings and tolled highways’ traffic flows.
“The absence of an anticipated six sen dividend also disappointed expectations,” said Kenanga.
The research house trimmed its FY21 earnings by 14% to cater for the FMCO impact but maintained its FY22 forecasts.
It kept its “outperform” recommendation on the counter with a lower sum-of-parts-based target price fo RM3.90 from RM4.70 previously.
Moving forward, the research house is optimistic that Gamuda will secure at least one of two outstanding tenders in Australia after losing out on its bid for the A$2.6bil M6 motorway project.
Gamuda can use their existing tunnel boring machines as the Sydney Metro West project and the Sydney Airport Link have similar technical requirements with the Malaysian MRT project, said Kenanga.
In addition, their JV partners for these two tenders – John Holland and Laing O’Rourke – are also more experienced and larger in size as compared to Gamuda’s partner for the M6 tender.
In Malaysia, the MRT3 tender, which was earlier targeted for August 2021, will likely be delayed by two to three months amid the FMCO with some changes in plan given the appointment of a new MRT Corp chairman.
Also, the commencement of the Penang South Reclamation is now delayed to August 2021 from May as Gamuda works towards obtaining the Environmental