GAMUDA - Below expectations; maintain OUTPERFORM (CIMB)

Gamuda’s FY7/10 core net profit made up 91% of our full year forecast and 83% of consensus. Despite improved EBIT margin which anchored the 45% yoy growth in net profit, the results were below expectations as we had overestimated associates contribution. We cut our FY11-12 forecasts by 4-6% and introduce our FY13 numbers. This, plus the effects of rolling forward our valuation horizon to end-2011 and applying our revised 13.8x target market P/E (15x previously) to our construction profit component raises our RNAV-based target price from RM4.78 to RM4.96. We reiterate our OUTPERFORM call with main potential re-rating catalyst being more progress and eventual approval of the MRT project. The stock remains as one of out top picks for the sector.