Gamuda banks on construction jobs abroad

Petaling Jaya: Gamuda Bhd believes its performance for 2023 will be driven by overseas construction activities and property sales, as projects in Australia and Taiwan continue to pick up pace following the divestment of toll highway operations in the first quarter of this year.

The construction titan said its resilience moving forward will be supported by a sizeable order book of RM20bil, including a A$2bil (RM6.3bil) boost from the acquisition of Downer Transport Projects (DTP) in Australia and unbilled property sales of RM5.7bil.

The latest release of Gamuda’s financial results for its third quarter ended April 30 of financial year 2023 (3Q23) saw net profit remaining steady at RM223.4mil, a 0.8% year-on-year (y-o-y) nudge-up from the corresponding quarter of last year, as revenue ballooned 81.2% y-o-y to RM2.07bil.

In a filing with Bursa Malaysia, Gamuda credited stronger overseas construction earnings that replaced its highway profits following the divestment of its toll highway operations.

Excluding highways, the group’s quarterly core earnings rose 11%.

Cumulatively for the nine months ended April 30, earnings almost tripled to RM1.6bil from the RM551mil posted in the same period of FY22, boosted by a 58% jump in turnover to RM4.82bil.

Gamuda attributed the significant cumulative net profit growth to the one-off cash gain of RM1bil on its divestment of toll highway operations in October 2022.

“Excluding this one-off gain, core earnings rose 10% to RM608mil compared with last year’s earnings of RM551mil as stronger overseas construction earnings replaced highway earnings following the divestment,” it said.

The group also noted that its overseas revenue surge was anchored by overseas construction revenue, which rose sharply to RM2.1bil compared with the previous year’s turnover of RM333mil as projects in Australia and Taiwan gathered pace.

Compared with the preceding quarter ended Jan 31, net profit also rose 14% from RM195mil on the back of stronger property earnings, it said.

On top of that, the group reported a healthy balance sheet with almost zero net gearing.

In line with the positive results, Gamuda has declared an interim dividend of six sen per ordinary share in respect of the financial year ending July 31, 2023 (FY23).

The group’s board had also determined that its Dividend Reinvestment Plan, which was approved by shareholders at an EGM in December 2019, shall apply to the second interim dividend, which grants shareholders an option to elect to reinvest the said second interim dividend into new shares.

The group has a host of overseas projects that are contributing to its earnings including the construction and extension of marine bridges in Taiwan worth about RM824mil, as well as the Taoyuan City Underground Railway Project that is expected to be completed by November 2030 and is valued at RM2.13bil.

Gamuda earlier this week has completed the acquisition of the Australian transport projects business of DTP for an enterprise value of A$212mil (RM636mil).

According to the group, the DTP’s current projects have an estimated work-in-hand value of A$2bil (RM6.3bil).

“This acquisition marks a significant milestone for Gamuda and represents our commitment to strategic growth and expansion in the infrastructure and transport sector in Australia.

“The DTP acquisition is in line with Gamuda’s growth plan of achieving A$3bil (RM9.5bil) in revenue annually in Australia within the next two to three years,” it added.

Pertaining to the Penang South Island project, Gamuda said its 70%-owned unit, Silicon Island Development Sdn Bhd, has yesterday awarded the design, management, construction and completion of the Phase 1 reclamation works of Island A to turnkey contractor SRS TC Sdn Bhd, which itself is a wholly owned subsidiary of Gamuda.

Silicon Island Development has been required under the project development agreement to grant the full scope of Island A works on a turnkey basis, which includes reclamation of Island A measuring 2,300 acres, common infrastructure works for Island A and Highway PIL2A, to SRS TC.

Subsequently, SRS TC has forwarded the award of Phase 1 reclamation works, a contract valued at RM3.72bil, to sister company Gamuda Engineering Sdn Bhd.

The project, which involves the design, management, construction and completion of Phase 1 reclamation works measuring about 1,260 acres on Island A, is to commence on July 1, and is targeted for completion in seven years.

Gamuda said the Phase 1 reclamation works are expected to contribute positively to the group’s revenue and earnings for FY24.

On a separate note, the group announced the contract renewal of its group managing director, Datuk Lin Yun Ling, for a further five years, which would see him helm Gamuda until June 30, 2028.