KUALA LUMPUR: Gamuda Bhd’s earnings prospects are looking bright, given the resumption of construction activities and the company’s healthy order book.
MIDF Research, in a report, said it is maintaining its 2022 and 2023 earnings forecast for Gamuda.
“We continue to expect that the group’s revenue and earnings prospects in 2022 to post a relatively strong recovery, following the potential prompt resumption of construction and business activities and increased workforce capacity at work sites.
“The strengthened balance sheet of the group and reduced net gearing to 21% from 30% previously provides the group with an enhanced borrowing capacity of RM4bil to be potentially used for the Penang South Islands (PSI) project.”
MIDF Research is also positive that the group’s foreign job replenishment prospects will continue, driven by its ventures into Australia’s growing construction market.
PublicInvest Research said Gamuda’s order book prospects remain bright despite temporary setbacks.
“The group has won a small project in Taiwan worth about RM230mil, bringing its current solid outstanding order book to RM4.5bil and providing earnings visibility for the next two years.
“Management also guided that the PSI commencement could be delayed to up to eight months, with the Penang state now seeking judicial review alongside a fresh application for environmental impact assessment approval to speed up the progress.” Gamuda swung to a net profit of RM214.08mil in the fourth quarter of its financial year ended July 31, 2021, from a net loss of RM12.52mil in the previous corresponding period.
The company attributed the increase in its quarterly earnings to stronger construction and property earnings, as works on all fronts picked up pace on the back of rigorous Covid-19 control measures adopted by the group, and the absence of last year’s one-off non-cash industrialised building system assets impairment of RM148.1mil.
For the quarter under review, Gamuda’s revenue stood at RM886.67mil, compared with RM926.52mil a year earlier.
It posted an earnings per share of 8.52 sen for the fourth quarter of 2021, compared with a loss per share of 0.50 sen in the previous corresponding period.
Year-to-date, Gamuda’s net profit grew 56% to RM588.32mil, compared with RM376.50mil in 2020, due to stronger construction and property earnings as work picked up pace.
Revenue stood at RM3.52bil, compared with RM3.66bil a year earlier.
TA Securities said it is raising Gamuda’s earnings forecasts for 2022 and 2023 by 1.6% and 4.8%, respectively, following the company’s better-than-expected financial results.
“We expect a better year ahead for Gamuda if there is no resurgence of new Covid-19 cases and political shocks, as the core businesses are likely to return to normalcy.“We present our 2024 earnings forecast of RM655.2mil, representing a 5.9% increase in earnings,” the research house said.