Singapore is exploring plans to expand its gold storage capacity as it seeks to position itself as a major global bullion trading hub , targeting central bank reserves and institutional flows. Strategic Push Into Bullion Market Authorities are evaluating potential sites — including areas near Changi Airport — to enhance vaulting infrastructure for gold storage , according to sources familiar with the discussions. The Monetary Authority of Singapore confirmed it is considering the use of existing facilities for gold vaulting , though it stopped short of confirming expansion plans. The move aligns with Singapore’s broader ambition to strengthen its role in precious metals trading and financial services . Targeting Central Banks and Institutional Demand A key objective is to attract central banks , which collectively hold around 39,000 tonnes of gold , accounting for roughly 18% of global supply , according to the World Gold...
Results in line
2QFY7/16 net profit of MYR160m (-12% YoY, -0.7% QoQ) brought 1HFY7/16 net profit to MYR321m (-13% YoY), accounting for 48%/51% of our/consensus full-year forecasts. KVMRT 2 major works are expected to be awarded soon and the underground works value could exceed earlier forecast. Further upside could come from other infrastructure projects win. Reiterate as TOP BUY at unchanged RNAV-TP of MYR5.65.
KVMRT 1 works at tail end
In 2QFY7/16, construction pretax profit (before FRS 11) was 8% QoQ lower (-37% YoY) as construction works recognition declined 32% QoQ (- 28% YoY) but partly offset by higher 2QFY7/16 construction pretax profit margin of 8.2% (+1.1ppt QoQ, -1.2ppt YoY). These higher margins were due to the higher portion of higher-margin underground works recognised.
Offset by stronger concession earnings
Property development pretax profit (before FRS 11) also fell 12% QoQ (- 9% YoY) due to slower property progress billings (-6% QoQ, -10% YoY) and property pretax profit margins were also 1.5ppt QoQ lower (+0.2ppt YoY) to 22.6%. The weaker construction and property earnings were partly offset by stronger water and tolled expressways pretax profit (before FRS 11) (+7% QoQ, +9% YoY) due to improved contribution from its India expressways after the additional maintenance cost incurred in 1QFY7/16.
Earnings unchanged, maintain BUY
The value of KVMRT 2 underground works could exceed expectation and it could be awarded within one month. MMC-Gamuda is in a strong position to win the works. Additional job wins from KVLRT 3, Pan Borneo Sarawak Highway and Gemas-JB double track rail would provide further upside. However, this could be partly offset by lower property sales in FY16. Gamuda is our TOP BUY pick at unchanged RNAV-based MYR5.65 TP.
Source: Maybank Research, 25 March 2016
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