OSK Research maintains buy on Gamuda, target price RM4.90

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KUALA LUMPUR (Dec 27): OSK Research has maintained its buy rating and target price of RM4.90 on Gamuda Bhd, following the company’s on-track progress in the construction of the first Klang Valley MRT line.

In a note today, the research house said Gamuda has procured 10 tunnel boring machines, of which the first two units will be delivered by end-March 2013.

“To date, 54 packages worth more than RM20bn have been awarded, while the remaining 32 packages totalling RM2bn-RM2.5bn will be handed out by end-1QCY13.” it said.

Gamuda registered RM330m worth of property sales in 1QFY13, falling short of its previous full-year guidance of RM1.7 billion but in line with OSK’s FY13 forecast for RM1.35 billion, with unbilled sales at RM1.2 billion.

“While the Vietnamese property market has yet to show any affirmative signs of rebounding, the company’s local property sales have remained resilient.” said the research house.

The group is also likely add potential jobs such as the remaining two MRT lines, the Gemas-Johor Bahru double track, as well as the Langat 2 water treatment plant to its existing RM4.5 billion-strong orderbook.

“Management believes that at least one of the two remaining KV MRT lines may be awarded by end-CY13. The feasibility studies conducted by independent consultants have been completed while discussions are now underway between MRT Corp, the Land Public Transport Commission (SPAD) and the relevant authorities,”

“With the general election now likely to be held in 1HCY13, we expect more news relating to the RM8bn Gemas-Johor Bahru double-tracking project, for which Gamuda will be partnering China Railway Construction in a joint bid, as well as the potential award of the Langat 2 water treatment plant in 2H next year.” it stated.

OSK said it continues to like Gamuda’s strong execution and sees it as the biggest beneficiary when the remaining two MRT lines are implemented in the second half of 2013.

At 11.16am, Gamuda was trading at RM3.62, up 2 sen with 840,200 shares done.

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