KUALA LUMPUR – Research firms have recommended a 'buy' call for Gamuda Bhd following its recent announcement of a 5.54-hectare (13.7 acres) land acquisition in Vietnam as part of the group's expansion plan.
The freehold residential land and part of a 1,052.18 hectares (2,600-acre) integrated township is set to be the administrative centre of the Binh Duong province in Vietnam.
The land is strategically located in Le Hoan Street in proximity to the upcoming World Trade Centre.
With numerous institutions of learning nearby, it should give rise to a population consisting of family households and white-collar workers.
MIDF Research, in a note, expects the group's revenue and earnings prospects in financial year (FY) 2022 to post a relatively strong recovery following the potential prompt resumption of construction and business activities and increased workforce capacity at work sites.
“Coupled with its focus for oversea expansion, we remain positive that the group’s job replenishment prospects will continue,” MIDF Research said, adding that it is retaining its 'buy' call with a maintained target price (TP) of RM3.63 per share.
Meanwhile, Maybank IB Research said the latest acquisition is also in line with Gamuda’s geographical diversification strategy with 61-67% of its property sales in FY2018-2021 coming from its overseas projects, with Vietnam contributing 39-63%.
The company expects the land acquisition to complete by the third quarter calendar year (CY) 2022, which means that contribution to earnings could start from first quarter FY2023.
Gamuda is at the forefront in managing its environmental, sustainable and corporate governance (ESG) risks, in our view. This enhanced resume will lend support in the future tender of major engineering and infrastructure projects in Malaysia and overseas,” it said.
Maybank IB said it made no change to the earnings estimates and real net asset value (RNAV)-TP (RM4.00 per share) pending completion of the land acquisition and the development details.
On a similar note, Public Investment Bank, in a research note, said the Binh Duong acquisition is expected to expand Gamuda’s existing project in Celadon City which currently just left with 8.09 hectares (20 acres) landbank (RM750 million gross development value – GDV) and is expected to be fully developed in the next two years.
It noted that Gamuda plans to launch the projects by the second half (2H) of 2022 with a GDV of RM495 million upon the completion of its land acquisition in 3Q2022.
“Our 'outperform' call is affirmed with an unchanged sum-of-the-parts TP of RM3.68 per share,” said Public Bank Investment Bank.
Gamuda is mainly engaged in engineering and construction, property development, and water and expressway concessions.
As at 10.38am, Gamuda's shares was six sen lower or 1.81% to RM3.26, with 972.500 shares transacted. – Bernama, October 20, 2021
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