Gamuda & WCT - Top picks for Constructions Sector

KUALA LUMPUR: CIMB Equities Research sees the downside as fairly limited for WCT and Gamuda following the fallout from the developments in Vietnam and Dubai last week, though WCT is involved in Abu Dhabi only.

The research house said although the developments there were negative surprises, their implications for WCT and Gamuda were unlikely to be substantial.

CIMB Research said for Gamuda, the devaluation of the Vietnamese currency, the dong, "has both a cost savings impact and a small reversal of profits for infrastructure works at Yenso Park". It added the potential negative impact on property demand was likely to subside over time.

As for WCT, its exposure to the dong relates only to expenses of about RM1 million for its US$700 million Platinum Plaza project in Ho Chih Minh City.

"The good news is that both companies do not have exposure to Dubai. We maintain our forecasts and Outperform calls on WCT and Gamuda which are also our top picks for the sector," it said.

The research house said potential re-rating catalysts include subsiding fears over Vietnam and the Middle East, new contract wins, and progress of mega jobs. It also maintained its overweight on the CONSTRUCTION [] sector.

Written by Joseph Chin
Monday, 30 November 2009 13:44

Gamuda shares hit by uncertain outlook

PETALING JAYA: Shares of Gamuda Bhd hit a six-month low yesterday as investors cast a wary eye on the group’s prospects despite an improved performance in the first quarter ended Oct 31 and its rosy outlook for the construction sector in 2010. The lack of big projects secured by Gamuda since the start of its fiscal year ending July 31, 2010 (FY10) remained a key concern, analysts said.

The counter fell as much as 3% yesterday, but recovered somewhat to close at RM2.61 – down 5 sen, or 1.9%, for the day.

On Tuesday, Gamuda announced it made a net profit of RM63mil for the three months ended Oct 31, up 14.5% from the RM49mil recorded in the same quarter last year.

Revenue was up 1.6% at RM624mil.

The company also announced a surprise 50% jump in interim dividend payout to 6 sen per share, which prompted analysts to upgrade Gamuda’s full-year dividend forecast to 12 sen per share.

At the current market price, the stock’s potential dividend yield stood at 4.6%.

“I don’t think people see Gamuda as a high dividend-paying stock, but the increased cash payout will probably limit the stock’s downside risk, going forward,’’ a fund manager with a local asset management firm said.

Despite the improved year-on-year results, Gamuda’s net profit in its first three months made up 18% of Kenanga Research FY10 target of RM340mil and consensus estimates of RM337mil for the company.

Kenanga remains “neutral” on Gamuda, and has kept its FY10 and FY11 profit predictions intact based on Gamuda’s strong unbilled property book and better operating margins ahead.

But RHB Research Institute believes the consensus estimates are too high.

“The full-year consensus number can only be achieved if there are sharp increases in construction margins over the remaining quarters,’’ it said yesterday.

Gamuda’s construction pre-tax margin was 2.6% in the first quarter, which was far below the market’s projection of 6% for FY10.

RHB Research also believes that the market has “under appreciated” the possibility of delays in project implementation and sub-par margins due to stiff competition.

Other negative developments affecting Gamuda and many local construction players include reduced gross development expenditure in 2010 by the Government, Vietnam’s currency devaluation and the Dubai credit crisis.

RHB Research reckons that Gamuda’s current “rich valuations” have priced in the group’s earnings from its RM7.5bil outstanding construction orderbook.

At a briefing for analysts on Tuesday, Gamuda said it expected new contract awards to gather pace in the first half of next year.

Gamuda is vying for projects under the planned RM7bil Light Rapid Transport extension programme and the runway portion of the new low-cost carrier terminal at KL International Airport complex.

Gamuda also told analysts that it has emerged as the top two finalists for the Ulu Terengganu Dam project, and is currently bidding for RM4bil worth of jobs in Qatar, Oman and Bahrain.

On the property side, Gamuda is sticking to its planned May 2010 launching date for its residential units at Yenso Park in Vietnam.

On the local front, the company is reviewing its FY10 RM600mil sales target after a strong first quarter.

Meanwhile, Gamuda plans to sell as many as 268 million new warrants at 10 sen each on the basis of one warrant for every eight shares held.

Assuming a full conversion at a strike price of RM2.67, the exercise will raise RM715mil in fresh capital, but may dilute its earnings by about 5%.

sources from star newspaper dated 24 Dec.

Green Packet's 3Q net loss widens to RM31.9m

KUALA LUMPUR: GREEN PACKET BHD []'s net loss widened further to RM31.85 million in its third quarter ended Sept 30, 2009 from RM10.29 million a year earlier, despite surging revenue, due partly to a continued heavy promotional activities and subscriber acquisition costs.

The WiMAX and broadband solutions provider said higher amortisation and depreciation costs for further expansion of the business also contributed to the widening losses. Revenue surged nearly 250% to RM63.04 million from RM18.17 million.

For the nine months to Sept 30, 2009, net loss widened to RM81.94 million from RM17.91 million a year earlier, while revenue rose 156% to RM160.99 million from RM62.96 million.

Green Packet said today its board viewed "2009 and 2010 as important investment years to prepare, position and expand the group's operations".

It said the ongoing investments in Malaysia, Singapore and Thailand was to establish a physical presence for long term growth in the provision of affordable fixed and wireless broadband and voices services.

"In view of these planned investments, the board of directors expects the performance of the group to remain as planned for the financial year ending Dec 31, 2009 with improved prospects for FY10," the company said.

Green Packet unaware of unusual market activity

KUALA LUMPUR: GREEN PACKET BHD [and REDTONE INTERNATIONAL BHD [, both of which were queried by Bursa Malaysia Securities over unusual market activity on Friday, Nov 6, replied they were unaware of any reasons for the activity.

Green Packet said the only announcements made were in October about its Packet One WiMAX operations securing approval to launch services in East Malaysia and that it had secured the go-ahead to operate in Singapore.

RedTone said, after making inquiries, to the best of its knowledge, it was not aware of any reasons that might have contributed to the unusual market activity.

SCOMI Research

SCOMI price was going down as many other counter are on the up trend because of investor believe market recovery is coming soon. You also can noticed that many shareholder disposed their share in big quantity and no buying from any financial institute.

The internet forum research conclusion is this is the political share and it future move will solely depend s on the politic move as well.

source from The Edge 6 Nov
Scomi Group Bhd's net profit rose 19% rise in net profit to RM22.98 million in its third quarter (3Q) from RM19.33 million a year earlier mainly due to the contribution from the energy and logistics engineering division.

One year history chart
8 months resistant = RM0.57
TP: RM1.00