Latest news with #SuburbanRailLoop
The Star
12-06-2025
- Business
- The Star
Gamuda on track to achieve order book aim
Gamuda's current order book is estimated at RM37bil. PETALING JAYA: Gamuda Bhd 's failure to land the Suburban Rail Loop (SRL) project in Australia will not diminish its plan to have an order book of RM40bil to RM45bil by the end of its financial year ending July 31, 2025 (FY25), says CGS International (CGSI) Research. The construction and engineering giant has a tender book of RM24bil, including bids for five data centre buildings contracts, according to the research house. Gamuda's current order book is estimated at RM37bil. 'While it did not win the SRL Linewide project, of Gamuda's portion is estimated at RM10bil, we believe the company could win other projects that could replace it. 'At its March analyst briefing, Gamuda highlighted a pipeline of RM35bil jobs where SRL was one of them. 'So far it has won one project from this list, the RM1bil data centre enabling works for Pearl Computing,' the research house stated in a report following a meeting with its management. Some of the projects on bid is the Sabah water treatment plant (RM4bil worth of works), additional works for the Penang light rail transit or LRT project estmated at RM3bil, mass rail transit job in Taiwan (RM3bil), station works in Sydney/Melbourne (RM6bil) and early contractor involvement for renewable energy in Australia worth some RM2bil. Gamuda is due to file its third quarter (3Q25) results on June 26, and CGSI Research expects an improvement in net profit year-on-year (y-o-y) and sequentially, with a meaningful pick-up to come in FY26 when its local construction projects and Vietnam property project gradually move away from the shallow part of the S-curve recognition. CGSI Research said Gamuda is, however, unlikely to meet its RM6bil property pre-sales target for FY25 as approvals for its Hanoi project (Gamuda City) have been slow. 'As Gamuda has pencilled in RM840mil pre-sales for this project for FY25, we believe FY25 group pre-sales will likely come in flat year-on-year (y-o-y) at RM5bil. 'Another concern for investors regarding its exposure to the Vietnam property market, where it has eight projects with a gross development value (GDV) of RM18bil (29% of total GDV as of Jan 25), is US import tariffs, which could disrupt foreign investment and sentiment,' CGSI Research added. The research house viewed Gamuda's exposure to Vietnam as heavy on its residential quick turnaround projects located in prime locations. 'The litmus test is the launch of the third phase of Eaton Park, which we expect to take place in June. 'The maiden launch in May 2024 was fully sold in two hours, leading to a second launch in December 2024, which had since been fully sold as well,' CGSI Research noted. It has retained its 'add' call on Gamuda with a target price of RM6 a share despite trimming its earnings projections on the company. CGSI Research cut its FY25 to FY27 earnings per share forecast for Gamuda by 11%, 7% and 2% for FY25, FY26 and FY27 respectively, driven by expectations of slower progress for some construction projects, such as Silicon Island reclamation works (six months behind schedule) and the Penang LRT. There was also a delay in contract awards of projects including the Sabah Water Treatment plant as well as data centre projects. 'Nevertheless, we think FY27 earnings should still double from FY24, implying three-year compounded annual growth rate of 24%,' it said.
AU Financial Review
12-06-2025
- Business
- AU Financial Review
Allan's SRL funding plan contradicts housing promise: property industry
The property industry says it is not financially viable to build new apartments under the Victorian government's Suburban Rail Loop plan because its funding model discourages property development, despite Premier Jacinta Allan insisting it is a housing project. Victoria has committed $12 billion of its own funds for the first stage of the SRL, known as SRL East, and is relying on the federal government to finance a third. The Allan government claims the remainder will be raised via value capture, using funds raised by increased stamp duty on commercial properties and levies on developers and residential car parking.
The Age
09-06-2025
- Business
- The Age
New charge for Victoria's state-backed insurer of Suburban Rail Loop
The agency's finances have been hammered by payouts for those affected by natural disasters and the collapse of multiple home builders over the last three years. The October 2022 floods and insolvency of Porter Davis Homes contributed to $300 million in unexpected payouts alone. Pearson said the VMIA would not require a cash injection because it had it a plan in place to improve its finances that included the charge and other 'upstream' measures to minimise claims. He did not say the cost of the charge, claiming the details were commercial in confidence because they would reveal premiums charged to customers. 'Yes, there is a capital management charge that will be put in place to help improve the finances of the VMIA because of some of the natural disasters the state's confronted, but also the egregious behaviour of Porter Davis,' Pearson said. 'What I'm also saying, though, is the VMIA is not some passive, clip-the-ticket insurance provider. 'They work very closely with their clients to look at trying to improve and go upstream, to have more preventative strategies, which has a direct result in relation to premiums.' The government expects the VMIA to get back to the midpoint of its preferred financial health range by June 2029. Opposition finance spokeswoman Bridget Vallence said the charge meant the government was essentially taxing itself, as one of the VMIA's biggest clients, to repair the agency's parlous financial situation. 'Labor's new capital recovery charge will result in higher premiums, which will mean government departments will be forced to make more cuts to services,' she said. 'What is even worse, the government does not expect the VMIA to return to financial stability until 2029, another four years away, yet there is no credibility to this forecast given the VMIA is insuring the high-risk Suburban Rail Loop project.' Loading Symes promised 'no new taxes' in her first budget in May saying she had listened to the concerns of the business community. While the VMIA capital management 'plan' was forecast in its annual report, released in October, there was no mention of the new charge. The Allan government has also faced intense criticism for increasing the rate charged as part of its fire services levy, now the emergency services and volunteer fund, from July 1. Residential charges will rise from 8.7 cents to 17.3 cents for every $1000 of a property's capital improved value, but primary producers will have their rates frozen after a backlash from farmers and concerns about the impact of drought conditions. In the 2023-24 financial year, the VMIA had an operating deficit of $98.7 million driven by 'higher-than-expected claims experience across most portfolios', its annual report shows. The agency paid out $678 million in claims, a 26 per cent increase on the year before, which included 5100 resolved domestic building insurance claims, paying out $193 million. To offset the rise in claims and the soaring cost of construction, building premiums have been consecutively increased in 2023 and 2024, both by more than 40 per cent. The VMIA has previously estimated responding to the Porter Davis insolvency alone lowered its funding ratio by 5 percentage points. Flood and storm events in late 2022 were also the largest loss of state assets in the agency's history. Their annual report also explains that the construction and material damage for the Suburban Rail Loop has 'one of the longest insurance policy periods issued at inception for any major infrastructure project worldwide'. 'These insurance products provide value to the state, through effective risk transfer for the project, and reinforce VMIA's expertise and track record of leveraging centralised risk to secure substantial insurance for commercially competitive pricing.' Speaking at estimates, Pearson said he did not believe funding the Suburban Rail Loop had any impact on the VMIA's risk profile. Representatives for the department confirmed they were not aware of any claims related to the project, which would be the only financial impact on the insurer. A government spokesperson said the VMIA capital management plan was designed to return the body to an acceptable insurance funding ratio in the medium term. 'While year-to-year volatility in the VMIA's operating result is to be expected, the VMIA's long-term financial position is sound, and the VMIA is able to meet any obligation it may be called on,' they said. Another government-backed insurance scheme, WorkCover, needed $1.3 billion in payouts to meet its commitments, prompting premium hikes of 42 per cent in 2024 and changes which limit mental health claims for burnout and stress.
Sydney Morning Herald
09-06-2025
- Business
- Sydney Morning Herald
New charge for Victoria's state-backed insurer of Suburban Rail Loop
The agency's finances have been hammered by payouts for those affected by natural disasters and the collapse of multiple home builders over the last three years. The October 2022 floods and insolvency of Porter Davis Homes contributed to $300 million in unexpected payouts alone. Pearson said the VMIA would not require a cash injection because it had it a plan in place to improve its finances that included the charge and other 'upstream' measures to minimise claims. He did not say the cost of the charge, claiming the details were commercial in confidence because they would reveal premiums charged to customers. 'Yes, there is a capital management charge that will be put in place to help improve the finances of the VMIA because of some of the natural disasters the state's confronted, but also the egregious behaviour of Porter Davis,' Pearson said. 'What I'm also saying, though, is the VMIA is not some passive, clip-the-ticket insurance provider. 'They work very closely with their clients to look at trying to improve and go upstream, to have more preventative strategies, which has a direct result in relation to premiums.' The government expects the VMIA to get back to the midpoint of its preferred financial health range by June 2029. Opposition finance spokeswoman Bridget Vallence said the charge meant the government was essentially taxing itself, as one of the VMIA's biggest clients, to repair the agency's parlous financial situation. 'Labor's new capital recovery charge will result in higher premiums, which will mean government departments will be forced to make more cuts to services,' she said. 'What is even worse, the government does not expect the VMIA to return to financial stability until 2029, another four years away, yet there is no credibility to this forecast given the VMIA is insuring the high-risk Suburban Rail Loop project.' Loading Symes promised 'no new taxes' in her first budget in May saying she had listened to the concerns of the business community. While the VMIA capital management 'plan' was forecast in its annual report, released in October, there was no mention of the new charge. The Allan government has also faced intense criticism for increasing the rate charged as part of its fire services levy, now the emergency services and volunteer fund, from July 1. Residential charges will rise from 8.7 cents to 17.3 cents for every $1000 of a property's capital improved value, but primary producers will have their rates frozen after a backlash from farmers and concerns about the impact of drought conditions. In the 2023-24 financial year, the VMIA had an operating deficit of $98.7 million driven by 'higher-than-expected claims experience across most portfolios', its annual report shows. The agency paid out $678 million in claims, a 26 per cent increase on the year before, which included 5100 resolved domestic building insurance claims, paying out $193 million. To offset the rise in claims and the soaring cost of construction, building premiums have been consecutively increased in 2023 and 2024, both by more than 40 per cent. The VMIA has previously estimated responding to the Porter Davis insolvency alone lowered its funding ratio by 5 percentage points. Flood and storm events in late 2022 were also the largest loss of state assets in the agency's history. Their annual report also explains that the construction and material damage for the Suburban Rail Loop has 'one of the longest insurance policy periods issued at inception for any major infrastructure project worldwide'. 'These insurance products provide value to the state, through effective risk transfer for the project, and reinforce VMIA's expertise and track record of leveraging centralised risk to secure substantial insurance for commercially competitive pricing.' Speaking at estimates, Pearson said he did not believe funding the Suburban Rail Loop had any impact on the VMIA's risk profile. Representatives for the department confirmed they were not aware of any claims related to the project, which would be the only financial impact on the insurer. A government spokesperson said the VMIA capital management plan was designed to return the body to an acceptable insurance funding ratio in the medium term. 'While year-to-year volatility in the VMIA's operating result is to be expected, the VMIA's long-term financial position is sound, and the VMIA is able to meet any obligation it may be called on,' they said. Another government-backed insurance scheme, WorkCover, needed $1.3 billion in payouts to meet its commitments, prompting premium hikes of 42 per cent in 2024 and changes which limit mental health claims for burnout and stress.
Herald Sun
04-06-2025
- Business
- Herald Sun
What a downgraded credit rating would mean for Victoria
Victoria has been repeatedly warned its credit rating is at risk of a further downgrade amid a ballooning debt pile on track to hit $194bn. Treasurer Jaclyn Symes flew to New York on Wednesday to meet with the heads of major ratings agencies to defend the state's AA rating — already the lowest in the nation. But what is a credit rating and, more importantly, what does it mean for you and me if it is again downgraded. What is a credit rating? A credit rating assesses the creditworthiness of a borrower, such as the Victorian government or a company. This credit grade is expressed as a letter. The three main ratings agencies, Standard & Poor's, Moody's and Fitch, operate a scale running from AAA — the highest grade dubbed 'prime' — all the way down to C for Standard & Poor's and Moody's, and D for Fitch. The grade indicates a borrower's ability to repay debt and helps investors evaluate the risk of lending money to a government — by buying bonds which show up as government debt — or a company. What is Victoria's current rating? Victoria holds a AA rating from Standard & Poor's. It was downgraded by two notches from AAA in December 2020, falling to AA+ and then AA, in December 2020 due to ballooning debt. Moody's stripped Victoria of its AAA status in February 2021, before downgrading it from AA1 to AA2 in 2022. The state holds a AA+ from Fitch. None of these rating are prime but are 'high grade' and represent a 'stable outlook'. That said, Victoria's credit rating is lower than any other state in the nation. Why does the rating matter? Credit ratings affect the government's borrowing costs — governments with a AAA rating can issue bonds with the lowest interest rate possible. As a rating falls, the interest payments investors will demand in order to buy Victorian bonds rise as the bonds are viewed as being of higher risk. Those interest payments are an expense to the Victorian government and paid by every taxpayer. So a lower credit rating means a higher interest expense bill on the state's debt for Victorian taxpayers. What does it mean if it falls below a certain rating? Another downgrade would be a massive hit to the Victorian government. Victoria's net debt is tracking to weigh in at $194b by 2028-29, during which the state will be spending close to 10c of every dollar in taxation revenue on servicing it. The government can ill afford to be paying more on its debt, especially as it looks to raise funds to plough into its Big Build agenda and its signature pet project, the $34.5b Suburban Rail Loop. A further downgrade would heap pressure on Victoria's ability to finance major projects, a well as on the government to maintain services. What have the credit rating agencies said? The two main rating agencies have both warned the Allan-government over the handling of the state's finances. Standard & Poor's has said: 'Reining in growth in public spending, including the government's wages bill, and achieving promised operating savings are key to strengthening the financial outcomes. 'However, these goals have proven to be difficult to achieve in recent years. Fiscal discipline is important, especially in the lead-up to the 2026 state election, because we have seen many Australian state governments lose control of their budget in the lead-up to an election.' Moody's has said: 'Should the risks materialise, or reform momentum weakens, or both, the potential for higher-than-expected debt and interest burdens would further weigh on Victoria's credit profile.' What has the government said? Treasurer Jaclyn Symes has defended the state's finances, arguing the 'major credit rating agencies continue to project a stable outlook for Victoria's credit rating'. 'Those that want to talk down the state will choose to do so,' she has said. 'I will continue to talk up the Victorian economy.' On Tuesday it emerged Victorian treasury officials have done no modelling on the impact of a credit downgrade on the state's economy. 'The five step fiscal strategy is aimed at retaining the current credit rating and improving it over time,' Department of Treasury and Finance secretary Chris Barrett told a Public Accounts and Estimates Committee hearing.
