KUALA LUMPUR: RHB research has raised its target price for Gamuda Bhd after its first quarter financial year 2024 (1QFY24) core net profit results met 20 per cent of its full year forecast.
The leading infrastructure and property development group's core earnings rose by 35 per cent to RM195 million, which made up 20 per cent and 19 per cent of RHB research's and concensus' full-year projections.
The research firm has raised its target price for Gamuda by 28 per cent to RM5.66 a share.
"Our Buy call is due to its diverse geographical base (c.70 per cent profit from overseas), even as it remains relevant in sizeable projects at home," RHB research said.
A further rerating catalyst would be faster-than-expected wins for local and overseas jobs – particularly for MRT3 which had its tender validity extended to Mar 2024.
RHB research expects earnings of Gamuda's property arm in the subsequent quarters to increase further backed by quick turnaround projects (QTPs) such as Elysian and Artisan Park in Vietnam and West Hampstead Central in London.
The projects make up 10 per cent of the gross domestic value under the QTPs. RHB research said the unbilled sales stood at RM6.7 billion at the end first quarter of financial year 2024 (Q1FY2024) from RM5.8 billion registered a year ago.
Gamuda's construction order book stood at RM25.8 billion as of Dec 6, 2023, after including the job win for the West Coast station and tunnels of Singapore's Cross Island Line phase 2 worth RM1.8 billion announced yesterday.
"We think that the RM25 billion new job win target over FY24-FY25 is still achievable – potentially coming from the second package of the Suburban Rail Loop East, Penang Light Rail Transit and phase 1B of the Pan Borneo Sabah Highway," said RHB research.
The group has secured RM 8 billion worth of new contracts in FY2024, said the research house in a note today.
Furthermore, Gamuda was recently shortlisted for a highway project in Melbourne, Australia, while the Premier of New South Wales Chris Minns proposed that the Rosehill Racecourse be transformed into a new metro station under the Australia's Sydney Metro West project (SMW).
Gamuda's tunnel boring machine launch site for the SMW project is located in the Rosehill area – spelling more potential opportunities for the group.