KUALA LUMPUR: Affin Hwang Capital Research said Gamuda Bhd
will face challenges to replenish its order book following the cancellation of the Kuala Lumpur-Singapore High Speed Rail and Klang Valley MRT Line 3 projects.
According to the research house, Gamuda's remaining order book of RM13.5bil will sustain its construction activities for the next three years.
Kenanga added that the Gamuda-led SRS consortium remains the project delivery partner for the RM32bil Penang Transport Master plan, which may be revived.
However, the research house said Gamuda remains hopeful of reviving the MRT3 project, and understands that the estimated RM45bil cost of the project could be scaled down to RM20-22bil.
Affin Hwang maintained its hold call on Gamuda and cut its target price to RM3.50 from RM4.42 previously.
"We expect Gamuda to see slower progress billings on its remaining construction order book while its property projects continue to face weak market conditions.
"We cut EPS by 3-12% for FY18-20E to reflect these concerns. We revise down our fully-diluted RNAV/share estimate to RM4.38 from RM4.90 to reflect the lower construction and property division valuations."
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