Maybank IB Reaffirms “Buy” Rating on Gamuda Bhd, Raises Target to RM7.25

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“Embassy Gardens led sales with RM166 million, followed by Wardian at RM153 million and Millbrook Park at RM41 million.”

Kuala Lumpur, 21th June 2024, 15.15pm – Maybank Investment Bank has reaffirmed its “buy” rating on Gamuda Bhd (KL) at RM6.44, adjusting the company’s FY2024E earnings by -5%, FY2025E earnings by +2%, and FY2026E earnings by +3%. The bank also increased Gamuda’s realised net asset value (RNAV) target price to RM7.25, up from RM6.85.

In a note released on Friday, the research house expressed continued optimism about Gamuda’s outlook in both its engineering and construction (E&C) and property operations.

Maybank IB noted that Gamuda remains confident about its prospects for winning engineering and construction (E&C) contracts.

The research house reported that Gamuda’s year-to-date wins for FY2024 total approximately RM9 billion, with expectations to secure an additional RM14 billion by the end of CY2024. This would bring its RM25 billion target for FY2024-2025E forward by six months.

“Upcoming projects in the pipeline include the Mutiara LRT Package 1 (Silicon Island to Komtar), Upper Padas HEP & water infrastructure, Melbourne suburban rail loop, and a high-capacity signaling project in Perth.

“After securing RM2 billion in data center projects last month — RM1.7 billion in Elmina Business Park and RM300 million in Cyberjaya — Gamuda is continuing discussions with data center operators.”

“Its two IBS plants in Sepang and Banting can support another large data center project,” the report stated.

Maybank IB highlighted that Gamuda is currently trading at a 15.3x FY2025E price-to-earnings ratio (PER), aligning with its average valuation since 2010.

“Our updated target price of RM7.25 suggests a 17.3x FY25E PER, which is 0.5 standard deviations above the mean.

“Our target price is based on RNAV, with its E&C operations valued at 18x FY25E PER (unchanged) and property operations based on the present value of future profits (unchanged),” the report concluded.

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