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Gamuda Berhad

Negotiating to Dispose Toll Roads

CORPORATE UPDATE April 2019

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KEY HIGHLIGHTS

• Weaker HY – PBT declined 14% to RM479m despite revenues remaining unchanged at RM3.5b; net profit fell 17% to RM345m; earnings at all divisions declined, due to disposal of SPLASH, lower earnings from KVMRT2, and marginally lower earnings from properties

• Negotiating for toll roads disposal – expected to be on a ‘willing-buyer, willing-seller’ basis; valuation methodology likely to be DCF based; expropriation unlikely; deal likely by mid ‘19

• KVMRT2 less profitable under new structure – the lower construction earnings and margins reflects the restructured contract; overall progress at 39% (UG:49%, ELE:32%)

• SPLASH completion due in 2 weeks – due primarily to procedural requirements; Gamuda Water in advanced stages of negotiations to finalize new Operations and Maintenance Agreement

• Properties achieve RM1.3b presales – Q2 presales came in at RM0.7b, bringing HY total to RM1.3b (-32%); presales mix still largely dominated by overseas projects with shortfalls mainly in domestic market; stronger 2HY seen; maintaining target of RM4.0b for FY19

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KEY UPDATES – Construction • Weaker construction earnings, margins – billings progressed at a healthy rate of RM1b/qtr, but Q2

earnings fell 23% to RM93m y-o-y; Q2 margins came in at 8.1% (Q1:8.4%), compared to 11.6% in Q2 last year

• Construction outlook likely to improve – 2HY should see stronger new project flows, with further improvement likely into 2020; catalytic projects include ECRL, KVDT, RTS, Pan Borneo Sabah, KVMRT3, PTMP and some privately financed infra project

• Secured a marine bridge project in Taiwan – the RM522m project was won on an open tender, and will be undertaken with Dong Pi (30%) on a 70:30 basis; with our RM365m share, order book now stands at RM10.9b

• KVMRT2 contract price review – government has reduced the contract value to RM30.5b, and converted the PDP structure to a single fixed-price, turnkey contract; completion date remains unchanged at mid-2022; consequently, all elevated WPCs are now redesignated as subcontractors to the turnkey contractor

• Penang Transport Master Plan (PTMP) – final approvals likely by mid-year; detailed design, tender calling, evaluation and awards likely to take one year; initial contract awards likely by late 2020

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CONSTRUCTION ORDER BOOK

Major

Projects

Balance

works

(RMbn)

Completion Status

Comments

% now completion

date

Ongoing

KVMRT Line 2

(50% share)

Pan Borneo Sarawak

(65% share)

Various others

9.2

0.5

1.2

39

39

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Mid-2022

Early 2021

2021/22

Restructured into a

single turnkey contract

Work momentum

steadily building up

Marine bridge (Taiwan),

Building works (Local)

• Current unbilled order book about RM10.9 billion (Mar 2019)

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KEY UPDATES – Properties

• HY earnings dip, but Q2 earnings improved – for HY, earnings dipped 4% to RM104m, but Q2

earnings improved 23% to RM57m compared to Q1; HY margins remained stable at 9.8%, however,

Q2 margins fell slightly to 9.3% from 10.4% in Q1; HY revenues remained largely flat at RM1.1b

• 2HY presales expected to improve – HY presales came in at RM1.3b (-32%); overseas presales

accounted for 65%; unbilled sales total RM2.2b; indications point to a stronger 2HY, driven by stronger

performances from Gamuda Cove, and Vietnam projects; maintaining RM4b target for FY19

• Gamuda Cove sees strong initial response – all double-storey residential launches are fully sold, but

not reflected in HY presales; interchange to provide direct access into township completing in 2

months; 50-acre Discovery Park to open mid-year; rising interest in project since masterplan unveiled

• Vietnam projects continue to shine – HY sales totalled RM760m, and appear on track to meet or

exceed FY target of RM1.5b; Celadon City continues to exceed sales targets; on the lookout for a new

landbank/project to sustain Vietnam sales in the medium term

• New Singapore residential project secured – Anchorvale Crescent, a RM2b GDV Executive

Condominium project undertaken in a 50:30:20 JV with H10 Holdings and Evia Real Estate

respectively, will be launched in 2020

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Anchorvale Crescent (Sengkang, Singapore)

Located 200m from Farmway and Cheng Lim LRT stations, 900m from the Sengkang MRT interchange

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Anchorvale Crescent (Sengkang, Singapore)

• Joint Venture between:

− Gamuda (50%)

− H10 Holdings (30%)

− Evia Real Estate (20%); note that Evia was also our JV partner for the highly successful

GEM Residences project

• Land size: 17,137 sqm (4.23 acres). Leasehold.

• Bid price of SGD318.9m, i.e. SGD576.24 psf GFA (0.003% higher than the next highest bid).

• Executive Condominiums, with average targetted selling price of SGD1100-1200 psf.

• Expected launch date in mid-2020.

• Total projected GDV of SGD650m (RM2b) over 3 years with 8-10% PBT margin.

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KEY UPDATES – Concessions • Negotiations underway for disposal of toll roads – Federal government is keen on acquiring all 4 toll

roads (LDP, Kesas, SPRINT, SMART); negotiations expected to be on a ‘willing-buyer, willing-seller’

basis, and market norms and practices applied in valuing the assets

• Risk of expropriation negligible – Government unlikely to risk unsettling capital markets, breaching

sanctity of contracts, killing investor confidence, ignoring rule of law

• Shareholders approvals required for both Litrak and Gamuda – Litrak requires minimum 75%

approval, whilst Gamuda requires >50%; given shareholders’ profiles, a bad offer will mean

shortchanging all Malaysian investors

• Earnings profile will change significantly post disposal – future concession earnings will be monetized

upfront and result in a cash warchest; management will seek to acquire/invest in new ‘recurring

income’ businesses

• SPLASH completion deadline extended by 2 weeks – procedural compliance by acquiror taking longer

than expected

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(RMmil) HY ended Jan ‘19 HY ended Jan ’18

(Restated)

Change

(%)

Revenue 2,029.0 1,769.7 +15

Profit from operations (EBIT) 352.5 364.6 -3

Finance Costs (48.5) (49.7) -2

Share of JVs (net of tax) 85.7 122.6 -30

Share of associates (net of tax) 59.9 105.8 -43

Profit before tax 449.6 543.3 -17

Tax (73.9) (88.0) -16

Minority Interests (30.6) (27.5) +11

Net profit attributable to equity holders 345.2 427.7 -19

Fully diluted EPS (sen) 14.0 16.7

Dividend per share (sen) 6.0 6.0

EBIT margins (%) 17.4 20.6

PBT margins (%) 22.2 30.7

INCOME STATEMENT SUMMARY

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INCOME STATEMENT (before FRS 11)

(RMmil) HY ended Jan ’19 HY ended Jan ’18

(Restated) Change (%)

Revenue 3,479.0 3,469.6 -

Profit from operations (EBIT) 476.0 512.6 -7

Finance Costs (57.0) (58.3) -2

Share of JVs (net of tax) - - -

Share of associates (net of tax) 59.9 105.7 -43

Profit before tax 478.9 560.0 -14

Tax (103.2) (118.2) -13

Minority Interests (30.6) (27.5) -+11

Net profit attributable to equity holders 345.2 414.3 -17

Fully diluted EPS (sen) 14.0 17.4

Dividend per share (sen) 6.0 6.0

EBIT margins (%) 13.7 14.8

PBT margins (%) 13.8 16.1

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BALANCE SHEET SUMMARY

(RMmil) As at 31 Jan ’19 As at 31 July ‘18

(Restated)

Current Assets 7,759.1 7,474.5

Current Liabilities 3,819.4 3,773.2

Current Ratio 2.0x 2.0x

Total borrowings 6,046.6 5,736.7

Cash and marketable securities 1,587.5 1,622.9

Net cash (4,459.1) (4,113.8)

Share capital 3,458.7 3,452.9

Reserves

Non-controlling interests

4,357.8

377.8

4,139.3

383.7

Total Equity 8,194.3 7.975.9

Net gearing (overall) 54% 52%

Net assets per share (RM) 3.17 3.08

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QUARTERLY SEGMENTAL PROFITS

(RMmil) Q218 Q318 Q418 Q119 Q2 `19 Q2 `18 %

Construction & Eng 122.7 103.5 61.7 98.4 93.2 122.7 -24

Properties 58.5 64.7 111.8 46.6 57.5 58.5 -2

Concessions 109.3 101.3 95.4 94.5 88.7 109.3 -19

Group Pretax Profit 290.5 269.5 268.9 239.5 239.5 290.5 -18

Group Net Profit 211.2 216.5 203.4 173.1 172.0 211.2 -19

% HY19 HY18

Construction 8.9 10.9

Properties 9.8 9.7

Concessions n.m n.m

Group PBT 13.8 16.1

YTD PBT Margins

(RMmil) HY19 HY18 %

Construction 191.7 228.4 -16

Properties 104.1 108.4 -4

Concessions 183.2 223.2 -18

Group PBT 478.9 560.0 -14

YTD Segmental PBT

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(RM mil) HY ended Jan ’19

HY ended Jan ’18

(Restated)

Net cash used in operating activities (26.0) (28.3)

Net cash used in investing activities (71.4) (181.4)

Net cash generated from financing activities 108.3 350.5

Net increase in cash and cash equivalents 10.9 140.8

Effects of exchange rate changes 15.7 (26.0)

Cash and cash equivalents at beginning of the period 977.1 499.5

Cash and cash equivalents at end of the period 1,003.7 614.3

CASH FLOW SUMMARY

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(RM mil) HY ended Jan ’19 HY ended Jan ’18

Long Term Borrowings

Medium Term Notes 2,575.0 2,465.0

Term Loans 1,767.1 2,123.5

Revolving Credits 102.8 118.3

4,444.9 4,706.8

Short Term Borrowings

Medium Term Notes 490.0 890.0

Commercial Papers 150.0 0.0

Term Loans 186.3 0.0

Revolving Credits 775.5 133.3

1,601.8 1,023.3

Total Borrowings 6,046.6 5,730.1

GROUP BORROWINGS AND DEBT SECURITIES

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Thank You