Maybank IB Research

PP16832/04/2011 (029339)

Company Update 10 December 2010

Gamuda Rail, and more rail

Buy (unchanged) Maintain Buy. Qatar MRT, which Gamuda is eyeing, will be 4x the size
Share price: RM3.79 of the Greater KL MRT which Gamuda-MMC JV is vying for a chariot
Target price: RM4.45 (unchanged) master role, and in the tunneling works. Besides rail, we believe that
Gamuda stands a good chance in securing other infrastructure works in
Qatar leading to the 2022 FIFA World Cup. Its chariot master role in the
Wong Chew Hann, CA KL MRT project looks positive. Our RM4.45 RNAV-based TP has
wchewh@maybank-ib.com imputed a 50sen per share potential from the KL MRT project.
(603) 2297 8686
Eyeing Qatar MRT project. Gamuda managing director said that the
group is interested to participate in the Qatar MRT construction worth
USD45b (RM141b) (source: Edge Daily). The completion deadline is
2021, ahead of the FIFA World Cup in 2022, hosted by Qatar. Gamuda
will submit its bid once the Qatar authorities announce their delivery
programme next year. We estimate that just a 5% slice of the USD45b
works is sufficient to lift Gamuda’s order book substantially – doubling it
from the present e.RM4b in values outstanding (ex-Nam Theun 1).

Gamuda’s chances. We view a fair chance of Gamuda securing works

involving tunneling for this Qatar MRT project, riding on its experience
in tunneling works for the Kaohsiung (Taiwan) MRT, and KL Penchala
and SMART tunnels. Besides rail, Gamuda also stands a good chance
in securing other infrastructure works in Qatar leading to the World
Cup. After 5 years there, Gamuda should have built up good rapport
Description: Construction conglomerate with interests in
property development, toll and water concessions. with building material suppliers, sub-contractors and the Qatari officials.
It should be familiar with the operating environment there by now.
Information:
Ticker: GAM MK Focus will still be at the KL MRT. We believe Gamuda’s focus in
Shares Issued (m): 2,044.5
Market Cap (RM m): 7,748.7 2011 will still be very much in clinching the chariot master / project
3-mth Avg Daily Volume (m): 8.49 delivery partner role for the Greater KL MRT project. We think that the
KLCI: 1,521.29
government’s decision on the project – project details and chariot
Major Shareholders: % master role – is due by early-2011, and it may continue to favour
EPF 8.0 Gamuda-MMC, despite competing proposals on the table. We also
Skim Amanah Saham 7.5
KWAP 5.5 think that the tunneling works for this project is very much in the bag for
Gamuda-MMC riding on their experience, and our expectation for the
Price Performance: JV to put in a competitive price, under an international bid.
52-week High/Low RM4.01/RM2.58
Gamuda – Summary Earnings Table
1-mth 3-mth 6-mth 1-yr YTD FYE Jul (RM m) 2009A 2010A 2011F 2012F 2013F
2.7 13.8 39.9 40.4 45.8 Turnover 2,727.3 2,455.1 2,972.6 3,144.6 3,015.2
EBITDA 176.0 249.1 323.6 386.8 463.2
Recurring Net Profit 193.7 280.7 354.7 405.7 446.2
Recurring EPS 9.7 13.9 17.5 20.0 22.0
Price Chart (RM3.79) EPS growth (%) (40.7) 44.1 25.9 14.4 10.0
DPS (sen) 8.0 12.0 12.0 12.0 12.0
5.0 GAM MK Equity
4.5 PER (x) 39.3 27.2 21.6 18.9 17.2
4.0 EV/EBITDA 39.9 28.2 21.7 18.1 15.1
3.5
3.0 Div Yield (%) 2.1 3.2 3.2 3.2 3.2
2.5 P/BV (x) 2.4 2.4 2.2 2.1 2.0
2.0
1.5 Net Gearing (%) 12.2 19.2 21.1 20.8 18.8
1.0
0.5 ROE (%) 6.2 8.7 10.6 11.5 11.8
0.0 ROA (%) 3.3 4.5 5.2 5.6 5.8
Dec-08

Dec-09
Mar-09

Jun-09

Sep-09

Mar-10

Jun-10

Sep-10

Consensus Net Profit (RM m) n.a. n.a. 389.1 474.5 537.4

Earnings revision (%) n.a. n.a. +1.7 +1.2 +1.0
Source: Maybank-IB
 Gamuda

Gamuda’s experience in Qatar. Gamuda first went into Qatar in 2005,

partnering WCT in securing the Dukhan Highway 1 construction worth
RM784m. Its second project, also in partnership with WCT and China’s
Sinohydro, is the New Doha International Airport (NDIA) CP10 works
worth an initial RM1.88b. The NDIA works are still ongoing with 88%
completed as at Jul 2010. WCT-Gamuda JV has also been shortlisted
for Dukhan 2 construction, but the results are only likely to be known in
2011. Dukhan 2 is worth more than RM1b in construction value.

INCOME STATEMENT (RM m) BALANCE SHEET (RM m)

FY Jul 2010A 2011F 2012F 2013F FY Jul 2010A 2011F 2012F 2013F

Revenue 2,455.1 2,972.6 3,144.6 3,015.2 Fixed Assets 300.7 313.9 325.8 336.3
EBITDA 249.1 323.6 386.8 463.2 Other LT Assets 2,047.0 2,220.3 2,407.7 2,590.0
Depreciation & Amortisation (18.2) (19.6) (21.2) (22.9) Cash/ST Investments 1,165.6 1,157.5 1,214.2 1,335.6
Operating Profit 231.0 303.9 365.6 440.3 Other Current Assets 3,037.6 3,415.0 3,561.3 3,499.7
Associates 154.0 176.1 190.5 185.6 Total Assets 6,550.9 7,106.7 7,509.0 7,761.5
Interest (Exp)/Inc (14.9) (18.6) (22.2) (26.0)
Exceptional Items 0.0 0.0 0.0 0.0 ST Debt 511.3 536.8 563.7 591.9
Pretax Profit 370.0 461.5 533.8 600.0 Other Current Liabilities 1,418.9 1,706.0 1,783.0 1,664.2
Tax (80.5) (99.9) (120.2) (145.0) LT Debt 1,278.7 1,342.7 1,409.8 1,480.3
Minority Interest (8.8) (6.9) (8.0) (8.8) Other LT Liabilities 34.2 34.2 34.2 34.2
Net Profit 280.7 354.7 405.7 446.2 Minority Interest 50.2 57.1 65.1 73.9
Recurring Net Profit 280.7 354.7 405.7 446.2 Shareholders' Equity 3,257.5 3,429.9 3,653.2 3,917.1
Total Liabilities+Capital 6,550.9 7,106.7 7,509.0 7,761.5
Revenue Growth % (10.0) 21.1 5.8 (4.1)
EBITDA Growth (%) 41.5 29.9 19.5 19.8 Share Capital (m) 2,025.9 2,025.9 2,025.9 2,025.9
EBIT Growth (%) 45.1 31.6 20.3 20.5 Net Debt 624.5 722.0 759.3 736.6
Net Profit Growth (%) 44.9 26.4 14.4 10.0 Working Capital 1,626.6 1,718.1 1,789.3 1,848.8
Recurring Net Profit Growth (%) 44.9 26.4 14.4 10.0 Gross Gearing % 54.9 54.8 54.0 52.9
Tax Rate % 21.8 21.6 22.5 24.2

CASH FLOW (RM m) RATES & RATIOS

FY Jul 2010A 2011F 2012F 2013F FY Jul 2010A 2011F 2012F 2013F

Profit after taxation 370.0 461.5 533.8 600.0 EBITDA Margin (%) 10.1 10.9 12.3 15.4
Depreciation 18.2 19.6 21.2 22.9 Op. Profit Margin (%) 9.4 10.2 11.6 14.6
Net interest receipts/(payments) 14.9 18.6 22.2 26.0 Net Profit Margin (%) 11.4 11.9 12.9 14.8
Working capital change (585.9) (91.4) (71.3) (59.5) ROE (%) 8.7 10.6 11.5 11.8
Cash tax paid (80.5) (99.9) (120.2) (145.0) ROA (%) 4.5 5.2 5.6 5.8
Others (167.0) (176.0) (558.0) (557.0) Net Margin Ex. El % 11.4 11.9 12.9 14.8
Cash flow from operations (430.3) 132.3 (172.2) (112.6) Dividend Cover (x) 1.2 1.5 1.7 1.8
Capex 48.2 (30.0) (30.0) (30.0) Interest Cover (x) 5.3 6.6 7.6 8.7
Disposal/(purchase) 0.0 0.0 0.0 1.0 Asset Turnover (x) 0.4 0.4 0.4 0.4
Others 0.0 0.0 0.0 0.0 Asset/Debt (x) 3.7 3.8 3.8 3.7
Cash flow from investing 48.2 (30.0) (30.0) (29.0) Debtors Turn (days) 217.4 217.4 217.4 217.4
Debt raised/(repaid) 251.3 89.5 463.6 468.3 Creditors Turn (days) 190.2 190.2 190.2 190.2
Equity raised/(repaid) 0.0 0.0 0.0 1.0 Inventory Turn (days) 27.7 30.0 30.0 30.0
Dividends (paid) (182.3) (182.3) (182.3) (182.3) Net Gearing % 19.2 21.1 20.8 18.8
Others 0.0 0.0 0.0 1.0 Debt/ EBITDA (x) 7.2 5.8 5.1 4.5
Cash flow from financing 69.0 (92.8) 281.2 287.9 Debt/ Market Cap (x) 0.2 0.2 0.2 0.2
Change in cash (313.1) 9.5 79.0 146.3 EV/EBITDA (x) 33.5 25.8 21.6 18.0

Sources: Company, Maybank-IB

10 December 2010 Page 2 of 3

 Gamuda

Definition of Ratings
Maybank Investment Bank Research uses the following rating system:
BUY Total return is expected to be above 10% in the next 12 months
HOLD Total return is expected to be between -5% to 10% in the next 12 months
SELL Total return is expected to be below -5% in the next 12 months

Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are
only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not
carry investment ratings as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear):

Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings
BV = Book Value FV = Fair Value PEG = PE Ratio To Growth
CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio
Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter
CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset
DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity
DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds
EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital
EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year
EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date
EV = Enterprise Value PBT = Profit Before Tax

Disclaimer
This report is for information purposes only and under no circumstances is it to be considered or intended as an offer to sell or a solicitation
of an offer to buy the securities referred to herein. Investors should note that income from such securities, if any, may fluctuate and that each
security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental
ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on
price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Accordingly, investors may
receive back less than originally invested. Past performance is not necessarily a guide to future performance. This report is not intended to
provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the
particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding
the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently
verified by Maybank Investment Bank Bhd and consequently no representation is made as to the accuracy or completeness of this report by
Maybank Investment Bank Bhd and it should not be relied upon as such. Accordingly, no liability can be accepted for any direct, indirect or
consequential losses or damages that may arise from the use or reliance of this report. Maybank Investment Bank Bhd, its affiliates and
related companies and their officers, directors, associates, connected parties and/or employees may from time to time have positions or be
materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting
commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services
for or relating to those companies. Any information, opinions or recommendations contained herein are subject to change at any time,
without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”,
“believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”,
“should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions
made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ
materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-
looking statements. Maybank Investment Bank Bhd expressly disclaims any obligation to update or revise any such forward looking
statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated
events.
This report is prepared for the use of Maybank Investment Bank Bhd's clients and may not be reproduced, altered in any way, transmitted to,
copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of Maybank
Investment Bank Bhd and Maybank Investment Bank Bhd accepts no liability whatsoever for the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
Published / Printed by

Maybank Investment Bank Berhad (15938-H)

(A Participating Organisation of Bursa Malaysia Securities Berhad)
33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur
Tel: (603) 2059 1888; Fax: (603) 2078 4194
Stockbroking Business:
Level 8, MaybanLife Tower, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur
Tel: (603) 2297 8888; Fax: (603) 2282 5136
http://www.maybank-ib.com

10 December 2010 Page 3 of 3