Friday, September 17, 2010

Gamuda climbs ahead of inclusion into FBM KLCI, MRT hopes

KUALA LUMPUR:Securities of GAMUDA BHD [] rose in active trade on Friday, Sept 17 ahead of its inclusion into the 30-stock FBM KLCI next week and underpinned by the upside for the infrastructure company in the proposed mass rapid transit (MRT) for Kuala Lumpur.

At 9.20am, Gamuda was up nine sen to RM3.79 with 1.34 million shares done. Gamuda-WD added four sen to RM1.21 with 4.41 million units transacted while Gamuda-CM gained 1.5 sen to 17.5 sen.

The FBM KLCI was up 5.97 points to 1,478.92. Turnover was 88.12 million shares done valued at RM121.78 million shares done. There were 173 gainers, 52 losers and 141 stocks unchanged.

OSK Research, had in its report issued on Sept 9, said it recently met up with Gamuda to discuss the proposed MRT.

It said consultants are currently studying its feasibility and the results should be known by month-end.

'We see strong incentives for the MRT to be implemented, driven by the rakyat's needs and political will. Securing the tunneling portion would enhance Gamuda's value by 28 sen a share, which we think is likely. We continue to see the MRT generating more positive news. Upgrade to TRADING BUY,' it said.

OSK Research said while it had not factored in any earnings impact from the MRT, it revised upwards its FY11-12 forecasts by 7%-13% by incorporating higher margins for its existing jobs and stronger property sales, which were the main takeaways from our recent meeting.

'Our revised SOP based TP of RM4 implies a FY11 PER of 20.5 times, still below its historical average of 22x forward PER. Continued positive news on the MRT should serve to further rerate the stock. The year before the Double Track job was awarded, Gamuda was trading at an average forward PER of 27.1 times,' it said.

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