KUALA LUMPUR: Gamuda Bhd’s outstanding order book of RM10.4bil is set to keep the group busy for the next five years, following recent job wins from its international markets.
TA Research, in a report yesterday, said this would alleviate initial concerns about the group’s depleting outstanding construction order book.
“Further jumps in the outstanding order book could also come from the Mass Rapid Transit 3 (MRT3) Circle Line and the Penang south island project,” it said.
MIDF Research, meanwhile, said Malaysia’s transition into the endemic phase bodes well for Gamuda’s labour-intensive business, which will see construction activities pick up pace.
“The potential rollout of mega projects by the government, including the upcoming MRT3, is also a positive development for Gamuda and it should be able to clinch some jobs.
“Its order book stands at RM10.4bil, mainly due its recent projects secured in Australia and Singapore.”
On March 1, Gamuda was awarded the Sydney Metro West – Western Tunnelling Package Project with a contract sum of AU$2.16bil (RM6.5bil) and a week prior, the contract to build the Defu Station and two tunnels in Singapore for S$467mil (RM1.45bil).On its property segment, MIDF Research said Gamuda currently has an unbilled property sale of RM5.2bil.
Gamuda tunnelling works
“We expect the property segment to maintain its upbeat performance for the two remaining quarters,” it said.
CGS-CIMB Research noted that Gamuda’s order book could potentially double by 2023.
“The potential projects include the underground scope of the MRT3 (estimated to be worth RM11bil), RM2bil Rasau water treatment plant, RM1bil to RM2bil Smart tunnel-equivalent flood mitigation project proposal in Selangor, ongoing bid in Australia and a contract tender in Taiwan (worth between RM200mil and RM300mil).”
Maybank Investment Bank (Maybank IB) is revising Gamuda’s earnings forecast for its current financial year ending July 31, 2022 (FY22).
“High engineering and construction (E&C) margins are expected to sustain in the second half of its current financial year as the reversal of contingency provision continues. The upward revision in our FY22 net profit incorporates the near-term strength in the E&C margins.”
Gamuda had announced that it would raise the monthly minimum wage of its foreign workers to RM1,600. It would also be raising the entry level pay for fresh graduates.
“These revisions have a cascading effect. Its workforce earning up to RM5,000 will also enjoy a pay rise. The impact on earnings is minimal,” said Maybank IB.
For its second quarter ended Jan 31, Gamuda saw its revenue and net profit jump 44% year-on-year to RM1.29bil and RM177mil respectively, due to stronger construction and property earnings as works on all fronts picked up pace.
For the half year under review, revenue grew 23% year-on-year to RM2bil while net profit was 41% higher to RM329.5mil, as construction and property earnings surged on the back of a pick-up in construction activities and higher contribution from overseas property projects.
Commenting on the group’s earnings performance, MIDF Research said the results were within expectations.
“We expect Gamuda to continue delivering stellar revenue and earnings in FY22.
“We are positive on the construction sector, in line with the rollout of the MRT3 and the government’s commitment to review and potentially revive canned projects such as the Kuala Lumpur-Singapore high-speed rail, which are positive news for Gamuda.”