Link: https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-267939-0
Abstract:
· Gamuda has announced that SPLASH (of which Gamuda owns 40%) has received a formal offer from the Selangor State Government to take over of the water assets and operations, for a price of M$2.0 bil, without taking into consideration the value of the net debt at SPLASH (estimated at c.M$1.6 bil).
· Essentially, this offer values SPLASH at c.M$400 mil, implying that Gamuda's stake is only worth about M$160 mil, significantly lower than our estimate of M$1.2 bil. At M$160 mil, the Selangor State Government essentially values SPLASH at c.1.6x the dividends up-streamed from SLASH to Gamuda annually. A value of M$160 mil also translates only to 8 sen per share.
· While we have yet to further clarify with management on the details of the offer letter, it seems to be low, in our opinion, especially when weighed against our DCF valuation of c.M$1.2bil (roughly on par with consensus). Nevertheless, the option now lies with Gamuda to either accept or reject the offer, deadline of which is set on Feb 20th 2009.
· Pending more clarification from management, we view the offer price as negative to the company.
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Showing posts with label Gamuda. Show all posts
Showing posts with label Gamuda. Show all posts
Saturday, 21 February 2009
Tuesday, 1 April 2008
kimeng: 27 mar Gamuda (buy)
Earnings and dividends no surprise
EPS for H108 was 8.9sen (+48% Y/Y), meeting our forecast of 18sen for FY08. There was broad-based improvement in performances of construction, property and toll/water concessions. Construction rebounded with a vengeance, with 59% higher turnover and more than 200% higher profits, due to sharp margin recovery to 10% in H108 from 4.4% in H107, in the absence of provisions for the Dukhan Highway in Qatar. The property division saw 3% lower sales but profits improved 83%, thanks to claw-back of cost provision and positive sentiment for the sector that helped Gamuda to rake in new sales of RM350m. The concessions grew profits by 25%, thanks to effect of toll hike for and higher stake at Lebuh Raya Damansara-Puchong and growing profits from water concessions. No dividend was declared for the quarter.
BUY maintained; target price of RM3.70
BUY retained, with a reduced target price of RM3.70, valuing the stock on FY09 PER of 12x, consistent with market average. Gamuda offers a very decent dividend of 8%, based on guided normal dividend of 25sen. Share price however could stay range-bound for awhile as investors keenly await delivery of promises, since confidence on the stock was spooked by recent share sale by the Managing Director.
EPS for H108 was 8.9sen (+48% Y/Y), meeting our forecast of 18sen for FY08. There was broad-based improvement in performances of construction, property and toll/water concessions. Construction rebounded with a vengeance, with 59% higher turnover and more than 200% higher profits, due to sharp margin recovery to 10% in H108 from 4.4% in H107, in the absence of provisions for the Dukhan Highway in Qatar. The property division saw 3% lower sales but profits improved 83%, thanks to claw-back of cost provision and positive sentiment for the sector that helped Gamuda to rake in new sales of RM350m. The concessions grew profits by 25%, thanks to effect of toll hike for and higher stake at Lebuh Raya Damansara-Puchong and growing profits from water concessions. No dividend was declared for the quarter.
BUY maintained; target price of RM3.70
BUY retained, with a reduced target price of RM3.70, valuing the stock on FY09 PER of 12x, consistent with market average. Gamuda offers a very decent dividend of 8%, based on guided normal dividend of 25sen. Share price however could stay range-bound for awhile as investors keenly await delivery of promises, since confidence on the stock was spooked by recent share sale by the Managing Director.
HLG: 27 March 2008 Gamuda - Political shifts cause uncertainty
Gamuda Berhad HOLD
Price target RM3.50
Share price at 26 Mar RM3.14
Investment summary
H108 results were in-line with consensus and forecast. Still, we remain lukewarm on Gamuda: (1) though the share price fell -45% in Mar08, multiples remain comparable to construction peers; (2) domestic job-flow (especially for big-ticket construction projects) could slow on on-going political uncertainty/changeovers; (3) FY09E net DY of 6% provides a fundamental floor to the share price, though this is still at risk from high foreign shareholding of 51%. We are negative on the Malaysian construction sector: (1) recent sharp political changes could lead to a slow-down in government job-flow; (2) construction valuations remain expensive relative to the broader market, despite a peakish macro environment; (3) in most cases, overseas jobs cannot compensate for local govt jobs in terms of profitability.
Do not chase the stock
Though the share price has halved, we remain bearish: (1) Gamuda has out-grown Malaysia’s govt-driven construction mkt in terms of scale/margins, and the success of overseas diversification is unclear; (2) domestic construction job-flow could slow due to political uncertainty.
Price target RM3.50
Share price at 26 Mar RM3.14
Investment summary
H108 results were in-line with consensus and forecast. Still, we remain lukewarm on Gamuda: (1) though the share price fell -45% in Mar08, multiples remain comparable to construction peers; (2) domestic job-flow (especially for big-ticket construction projects) could slow on on-going political uncertainty/changeovers; (3) FY09E net DY of 6% provides a fundamental floor to the share price, though this is still at risk from high foreign shareholding of 51%. We are negative on the Malaysian construction sector: (1) recent sharp political changes could lead to a slow-down in government job-flow; (2) construction valuations remain expensive relative to the broader market, despite a peakish macro environment; (3) in most cases, overseas jobs cannot compensate for local govt jobs in terms of profitability.
Do not chase the stock
Though the share price has halved, we remain bearish: (1) Gamuda has out-grown Malaysia’s govt-driven construction mkt in terms of scale/margins, and the success of overseas diversification is unclear; (2) domestic construction job-flow could slow due to political uncertainty.
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