OSK Research sees orderbook replenishment risk ahead for Gamuda

KUALA LUMPUR: OSK Research says GAMUDA BHD []’s 1HFY10 earnings of RM131 million (+25.9%) made up 44% of its FY10 estimates.

It said on Friday, March 26 Gamuda’s orderbook was RM7 billion and jobs are on track. Prospective jobs have however either been delayed or tenders lost.

“We see orderbook replenishment risk for FY10. On property sales, management expects a marginally weaker 2H. We are skeptical on the proposed water asset acquisition by SPLASH as many uncertainties remain,” it said.

OSK Research said valuations remain unattractive at 10x CY10 earnings vs its peers average of 14.5x. It maintained a Neutral call on Gamuda with a target price of RM2.75.

To recap, Gamuda posted 2QFY10 revenue of RM603 million (+1.9% y-o-y, -3.3% q-o-q) and earnings of RM68 million (+38.6% y-o-y, +7.9% q-o-q).

On a cumulative basis, revenue stood at RM1227 million m (+1.8% y-o-y) and earnings at RM131 million m (+25.9% y-o-y). From a y-o-y comparison, 1H margins were higher with EBIT and net amounts at 9.4% and 10.7% (FY09 comparatives at 7.6% and 8.6%).

“Overall, 1H earnings made up 43.6% of our full year projections (42.7%% of consensus). We deem this to be marginally below expectations,” it said.