Gamuda Bhd reported FY18 earnings driven by construction recognition and record property presales while strategically disposing of its stake in Splash Holdings to enhance liquidity and focus on core competencies.

Information on the Target

Gamuda Bhd, a prominent construction and property development firm in Malaysia, reported its financial performance for the fiscal year 2018 (FY18) on October 3, revealing core earnings in line with market expectations. The company achieved substantial growth, largely due to higher recognition of construction work and record property presales amounting to MYR3.59 billion, surpassing its initial target of MYR3.5 billion. The fourth quarter saw core net profits of RM203 million, resulting in total FY18 core earnings of RM818 million, reflecting a year-over-year increase of 17%.

Despite this strong performance, the company faced challenges from a one-off non-cash impairment of RM304.4 million related to the disposal of its stakes in Splash and Gamuda Water. Additionally, Gamuda's updated net asset value-based target price remains unchanged, primarily due to a lower construction order book valued at RM6 billion and adjustments regarding the sale of its water supply assets.

Industry Overview in Malaysia

The construction and property development industry in Malaysia has undergone significant transformations in recent years, driven by both domestic demand and foreign investments. The Klang Valley region, which encompasses Kual