On 4 Apr 2022, the private company Amanat Lebuhraya Rakyat (ALR) intends to buy the 4 highway toll concessionaires in Klang Valley from GAMUDA. Will GAMUDA benefit from this? Let me share with you some insights for this company.
Background
Gamuda Berhad (5398) is founded in 1976 and was successfully listed on the main market of Bursa Malaysia in Aug 1992. GAMUDA is one of the largest Malaysian infrastructure companies and has undertaken various projects, both locally and overseas. For examples, MRT Lines, highways, airport runways, railways, tunnels, water treatment plants, dams, infrastructure concessions and the development of new townships.
Business Model
GAMUDA operates through 3 segments: engineering and construction, property development and club operations, and water and expressway concessions.
The engineering and construction segment is engaged in the construction of highways and bridges airfield facilities, railways, tunnels, water treatment plants, dams, general and trading services, etc.
The property development and club operations segment is engaged in the development of residential and commercial properties and club operations.
The water and expressway concessions segment is engaged in the management of water supply and the management and tolling of highway operations. The company through its subsidiaries is engaged in property investment, quarrying, manufacturing of premix and laying of road operations, rental of properties and trading of construction materials.
GAMUDA’s 2Q FY2022 Result
1. GAMUDA’s overall earnings grew in 2Q FY2022 mainly driven by higher revenue of RM1.3bil (+72% QoQ +44% YoY).
2. The increase in revenue was mainly due to stronger construction and property earnings as works on all fronts picked up the pace.
3. The construction division contributed 45% of 2Q FY2022 revenue while PBT expanded 64% YoY. As such, the PBT margin reached 17.4% in 2Q FY2022 as projects such as MRT2 are nearing the tail end, therefore restoring unutilized provisions to the bottom line.
4. GAMUDA’s property development saw a robust PBT growth, at a faster pace of 164% YoY in 2QFY2022. The expansion was mainly from pre-sales of domestic properties such as Gamuda Cove and twentyfive.7 which both expanded >200% YoY in 1HFY2022. 5. GAMUDA has unbilled property sales totaling RM5.2bil and a healthy balance sheet with a low gearing of 0.2 times coupled with a strong cash position.
Prospect and Outlook
1. GAMUDA, under a consortium with Laing O’Rourke Australia (LORA) has won a RM6.5bil contract from the New South Wales government in Australia, for designing and constructing the Sydney Metro West-Western Tunneling Package. This contract is expected to commence in Apr and be completed by 2026.
GAMUDA will lead the consortium as head contractor, while LORA will take on a delivery partner role for an agreed fee. This contract will enable GAMUDA to remain competitive as it continues to expand its footprint in other overseas markets such as Singapore and Taiwan.
2. GAMUDA received an offer from Amanat Lebuhraya Rakyat (ALR) for the acquisition of SPRINT, LDP, KESAS and SMART highway concessionaires. ALR is a “not-for-profit” company aimed to assist the government in restructuring without the government paying compensation to the concession companies. They plan to raise RM5.5bil via Sukuk issuances to acquire the highway concessions, with existing operations and staff remaining intact post-acquisition.
The profit generated from these 4 highway concessions is strictly channeled for the servicing and early redemption of ALR’s financial debts. GAMUDA also stated that this takeover is expected to conclude in the end of May or early Jun 2022.
3. The tender for construction works on MRT3 (worth rm31bil) will be open in May 2023 and is expected to be awarded in 4Q 2022. The construction activities will be monitored directly by MRT Corp as the project developer will be assisted by a project management consultant.
Here is a quick snapshot of GAMUDA financial:
𝗠𝗮𝗿𝗸𝗲𝘁 𝗖𝗮𝗽: RM8.9bil
𝗡𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗦𝗵𝗮𝗿𝗲𝘀: 2.6bil
𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗽𝗲𝗿 𝗦𝗵𝗮𝗿𝗲: RM0.3
𝗣𝗘 𝗥𝗮𝘁𝗶𝗼: 13
𝗥𝗢𝗘: 7.2%
𝗡𝗧𝗔: RM3.7
𝗣𝗕 𝗥𝗮𝘁𝗶𝗼: 0.9
CAGR Revenue: 10.6%
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