GAMUDA Bhd is expected to replenish its order book by RM3.6 bil by year-end if the company succeeds in clinching its first Australian project, the M6 Stage 1.
In a note, PublicInvest Research said Gamuda and its partner, via a joint venture (JV) company, Gamuda-BMD JV, has been invited to tender for the new motorway link project which connects to Sydney’s south, costing about AU$2.6 bil (A$1=RM2.77).
“With a profit margin of 5%, this project will contribute RM181.7 mil to its pre-tax profit, spread over four years – accretion of RM45.4 mil per year to our pre-tax estimates and 5.7% upside to our net profit numbers, on average.
“It has a 50-50 chance given the strong profile of the other two contenders, despite the probability that the JV could turn out to be the lowest bidder among the three,” the research firm said.
The other two contenders are Acciona-Samsung JV, comprising Acciona Construction Australia Pty Ltd and Samsung C&T Corporation; and CPB–Ghella JV, comprising CPB Contractors Pty Ltd and Ghella Pty Ltd.
Samsung and Ghella are among the leading companies in the construction of major infrastructure projects worldwide.
Gamuda’s partner, BMD Constructions Pty Ltd, is a local company engaged in engineering design, construction and land development, transport infrastructure, as well as resources and energy sectors that operates in every state and territory within Australia and in the Philippines.
PublicInvest Research said BMD Constructions’ annual review 2018/2019 stated that the group has delivered around 200 projects, 87% of which were from repeat clients within Australia; and 43% of submissions won were highly commended, illustrating its ability to deliver best-for-project outcomes.
“We keep our forecasts unchanged at this juncture with the tender award expected to be in the fourth quarter of this year. We downgrade our call on Gamuda to ‘neutral’ given the limited upside potential with an unchanged target price of RM3.09.
“Gamuda’s share price has rebounded by 32.5% from the year-low, hence we think that the market has already priced-in the positives,” it added. — April 21, 2020, Bernama
