Gamuda rated Buy RM4.96 Target Price by OSK Research

OSK Research has maintained its "buy" call on Gamuda Bhd with a higher target price at RM4.96 from RM4.78 previously, as it expects the firm's construction margins to expand, going forward.

In a note today, OSK said it viewed the Gamuda-MMC Bhd's joint venture as the lead contender in the race for the mass rail transit's (MRT) underground portion where tenders would be called in the fourth quarter.

"Given the high risk and technically challenging nature of this package, we expect margins to be high at 15 per cent (pre-tax level).

"We are raising our financial year 2011 earnings by two per cent to reflect this," it said.

ECM Libra has maintained its 'hold' call on Gamuda with unchanged target price at RM3.99.

It said the cost of MRT tunnelling contracts was expected to be higher-than- expected.

ECM Libra said it viewed the risk of rising building material prices largely due to volatile crude oil price movements.

Meanwhile, Kenanga Research has downgraded Gamuda's financial year 2011 earnings by two per cent to RM402 million.

It, however, expected a stronger second half performance, which would be driven by higher construction revenue recognition and increased property income.

It has maintained its "hold" call on Gamuda, with unchanged target price of RM4.12.