KUALA LUMPUR: Maybank IB Research has given Gamuda Bhd a buy call with a target price of RM6, mainly on the back of the support of the company's construction division's KVMRT 2 works.
The research house said that alongside the KVMRT2 project that is gaining momentum, the acceleration of the Pan Borneo Sarawak Highway works and Gamuda's strong outstanding orderbook of RM8.2 billion will support to the company's earnings growth.
“The weaker contributions in 3QFY17 from both property (PBT: -8 per cent year-on-year, -12 per cent quarter-on-quarter) and concessions (-4 per cent YoY, flattish QoQ) was more than offset by the construction division which reported its strongest quarter in 3 years.
“Construction PBT of MYR87 million (+107 per cent YoY, +4 per cent QoQ) was supported by the acceleration of KVMRT 2 works. With the first tunnel drive expected to start in Nov 2017, we expect sustained earnings growth in the coming quarters," the firm wrote in the report today.