Hwang DBS Vickers Research keeps Gamuda high on its conviction pick and raised the target price to RM4.40.
In its report on Monday, Sept 27, it raised the target price to RM4.40 after factoring in the recent purchase of land along Jalan Pudu (RM600m gross development value), where Gamuda plans to build shop offices and service apartments.
At 19 times one-year forward PE and 2.1 times price/book value, valuations do not seem cheap, but they are at mean levels.
“We expect valuations to at least test 1SD above mean and for it to trade at premium valuations to its peers should it be awarded the mass rapid transit project,” it said.
Hwang DBS Vickers Research said in the two-months leading to the award of its RM12.5bn double tracking project, it traded at average 1-year forward PE of 29 times and peaked at 39 times a month later.
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