Target RM4.45 (Short Term: Trading Buy)
As 4QFY7/12 should be a stronger quarter, we consider Gamuda’s results to be above expectations even though annualised 9MFY7/12 core earnings were just 1% above our forecast (11% above consensus). The key driver was the double-digit construction pretax margin. Our EPS upgrades are due to stronger construction numbers. We trim our target price (10% RNAV discount) for balance sheet adjustments. Gamuda remains a Trading Buy and not an Outperform given the political overhang on the sector. Key catalysts are project wins and progress of MRT 2 & 3.