KUALA LUMPUR: Gamuda Bhd's prospects remain rosy given the improving outlook on the construction sector coupled with the potential roll out of the government's mega projects such as the Mass Rapid Transit 3.

       MIDF Research said in a note that it expects Gamuda to continue delivering stellar revenue and earnings in FY22, and maintains the stock as its top pick.

       "Known for its railway and tunnelling expertise through its JV outfit MMC-Gamuda, we expect Gamuda to be among the frontrunners for the upcoming MRT3 tenders that will be called in May for five turnkey contract packages, four of which are construction-related.

       "We also believe the group will end up winning the lion’s share of

       the MRT3 contracts, which has a project tenure of eight years, which may provide Gamuda solid earnings visibility," said MIDF Research in a report.

       On Gamuda's recent earnings, the research firm said 2QFY22 core net profit of RM174.8mil was within its and consensus expectation at 49.8% and 54.5% of full-year estimates respectively.

       However, the research house downgraded Gamuda to "neutral" as it believes the upsides have already been priced in on the back of positive news flow over the past month.

       Meanwhile, Kenanga Research raised its FY23 contract replenishment target for Gamuda to RM7.5bil from RM5bil previously.

       It maintained its FY22 earnings forecast but increased its FY23 estimate by 4% after imputing the higher contract replenishment target and higher FY22 property sales of RM3.7bil.

       It reiterated "outperform" with a higher sum-of-parts target price of RM3.70 post-earnings adjustment.

       "We like Gamuda’s international exposure and innovativeness to create its own jobs amidst the challenging replenishment outlook," it added.