Listed in 1992, Gamuda Bhd has been pivotal to the infrastructure development of our nation. For over 25 years, Gamuda Bhd is well-known for its engagement and successful completion of multiple complicated mega projects worth billions of ringgits. These projects include the Shah Alam Expressway in 1994, the LDP in 1996, the Sprint highway in 1999, SMART in 2002 and the KVMRT project since 2011.
As I write, Gamuda Bhd is worth RM 11.6 billion in market capitalization. Thus, it is positioned as one of the largest publicly listed companies in the construction sector in Malaysia. Here, I’ll cover 8 quick things you need to know about Gamuda Bhd before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: GAMUDA / KLSE: 5398
Market Capitalization: RM 11.6 Billion (13 November 2017)
Share Price: RM 4.79 (22 October 2017)
Syariah Compliant: Yes
#2: The Business
Presently, Gamuda Bhd derives income from three main business divisions. They are:
- Gamuda Engineering
Gamuda Engineering is involved in the construction of highways, railways, bridges, tunnels, and water treatment plants. This division is responsible for the success of the mega projects mentioned above. In 2017, Gamuda Engineering has reported RM 3.33 billion in sales, accounting for 58.3% of Gamuda Bhd’s group revenues. Thus, this division is the main sales contributor to Gamuda Bhd.
- Gamuda Land
Gamuda Land is the property development arm of Gamuda Bhd. It is the developer of Kota Kemuning, a thriving township in the midst of Klang Valley. Ever since, Gamuda Land has replicated its success to other developments such as Bandar Botanic in Klang, Horizon Hills in Iskandar Johor, Gamuda City in Hanoi, Celadon City in Ho Chi Minh City, and 661 Chapel St in Melbourne. In 2017, Gamuda Bhd has reported RM 1.87 billion in sales, accounting for 32.8% of group revenues of Gamuda Bhd. Thus, Gamuda Land is the second largest sales contributor to Gamuda Bhd.
- Gamuda Infrastructure Concessions
Gamuda Infrastructure Concessions derives income from both water and highway concessions. This division holds its water concession under SPLASH which supplies clean water to 45% residents residing in Selangor and the Federal Territory by operating the Selangor dam and two water treatment plants at Rasa and Bukit Badong. Besides, it is also the concessionaire of the Shah Alam Expressway, the LDP, the Sprint highway and SMART. In 2017, Gamuda Bhd has reported RM 508 million in sales, accounting for 8.9% of Gamuda Bhd’s group revenues. It is the third largest sales contributor to Gamuda Bhd.
#3: The Financials
Inclusive of joint venture revenues, Gamuda Bhd has reported continuous growth in group sales. It has increased from RM 3.09 billion in 2012 to RM 5.70 billion in 2017.
Overall, Gamuda Bhd has maintained its shareholders’ earnings at around RM 600 million levels over the last 6 years. In 2017, Gamuda Bhd has made RM 602 million in shareholders’ earnings despite recording its highest sales in the financial year. This is because Gamuda Bhd has incurred a one-off impairment loss of RM 98 million on SMART. Excluding this impairment loss, Gamuda Bhd would record RM 700 million in core net profits for the financial year 2017.
Source: Annual Reports of Gamuda Bhd
#4: Growth Plans
Gamuda Bhd has built a pipeline of projects in-hand which would contribute to the group’s financial results in the immediate future. They include:
- Gamuda Engineering
Gamuda Engineering has completed the KVMRT Line 1 project on 17 July 2017. It will continue its role as Project Delivery Partner (PDP) and Underground Contractor for KVMRT Line 2 (Sungai Buloh – Serdang – Putrajaya Line). The overall completion of this project is 11% as at August 2017.
Gamuda Engineering is engaged in a 60:20:20 joint venture with Loh Phoy Yen Holdings Sdn Bhd and Ideal Property Development Sdn Bhd to form SRS Consortium Sdn Bhd (SRS). SRS is currently appointed as the PDP of the Penang Transport Master Plan.
Gamuda Engineering is also involved in the Pan Borneo Highway package (WPC-04) in Sarawak under Naim Gamuda (NAGA) JV Sdn Bhd. The project is expected to be completed in 2020.
Overall, Gamuda Engineering has accumulated RM 7.8 billion in construction order book and is targeting RM 10 billion in new order book a year over the next 2 years.
- Gamuda Land
Gamuda Land is involved in several township developments such as Kundang Estates, twenty-five.7, Gamuda Gardens and Gamuda Cove. These townships make up a major part of Gamuda Land’s total undeveloped gross development value (GDV) of RM 55 billion.
- Gamuda Engineering
Gamuda Bhd has identified several risks which are related to the property development and construction industry. This includes reliance on foreign workers and skilled local talents, rising cost of construction materials, soft property demand among local buyers and intense competition from other reputable construction and property developers for local infrastructure projects.
As I write, Gamuda Bhd is trading at RM 4.79 a share.
In 2017, Gamuda Bhd has reported making RM 0.248 in earnings per share (EPS). Thus, its current P/E Ratio works out to be 19.31.
In 2017, Gamuda Bhd has reported having RM 3.05 in net assets a share. Thus, its current P/B Ratio works out to be 1.57.
In 2017, Gamuda Bhd has declared and paid out RM 0.12 in dividends per share (DPS). If Gamuda Bhd is able to maintain its DPS at RM 0.12 in 2018, thus, its expected dividend yields would be 2.51%.
#7: Investors’ Relation
For further enquiries on Gamuda Bhd’s Investors Relation matters, you may contact:
Mr. Clarence Boudville
Senior Group General Manager, Investors Relation
Telephone: 03-7491 2669
#8: Major Shareholders
As at 2 October 2017, the substantial shareholders of Gamuda Bhd are:
- Employees Provident Board Bhd: 11.28%
- Generasi Setia (M) Sdn Bhd: 4.42%
- Kumpulan Wang Persaraan (Diperbadankan): 3.48%
- Amanah Saham Bumiputera: 3.48%
- Dato’ Lin Yun Ling: 3.00% (Group Managing Director)
- Dato’ Ir. Ha Tiing Tai: 0.89% (Deputy Group Managing Director)