Gamuda’s prospects remain bright in Malaysia, said MIDF Research.
PETALING JAYA: MIDF Research says Gamuda Bhd
remains its top pick for the construction sector, backed by strong overseas expansion plans, especially in Australia, and its consistency in clinching sizeable jobs.
The group’s bulging order book of almost RM26bil will provide strong earnings visibility at least over the next three financial years, the brokerage firm noted.
In Malaysia, Gamuda’s prospects remain bright, said MIDF Research in its latest report yesterday.
“We can expect its involvement in the Mass Rapid Transit 3, Penang Light Rail Transit and Pan Borneo Sabah projects,” it said.
Furthermore, the strong pipeline of infrastructure projects in Australia bodes well for Gamuda’s prospects.
The group is now recognised as a Tier-1 contractor post-acquisition of DT Infrastructure Pty Ltd (DTI), placing them in a sweet spot to undertake other infrastructure projects, it added.
Gamuda’s balance sheet also remains healthy with a net gearing of 24.7%, which well below its self-imposed limit of 70%.
“All factors considered, we are maintaining our ‘buy’ recommendation on Gamuda,” said MIDF Research, which has an unchanged target price of RM5.55 on the stock.
Meanwhile, MIDF Research during a recent working trip to Sydney, Australia, led by Gamuda, visited several sites related to the group’s maiden and largest project in Australia, the Western Tunnelling Package for the Sydney Metro West (SMW-WTP).
“The group has made great progress from our observations and this further strengthens our view of Gamuda’s growth alongside the positive prospects in Australia,” noted the brokerage firm.
To recap, the size of the SMW-WTP is about A$2.57bil (RM7.7bil), including RM1.2bil of variation orders, and the current completion progress is at 39%.
Gamuda Australia and its consortium partner Laing O’Rourke was awarded the project by the New South Wales government in March 2022.
The job scope includes 9km of twin, metro rail tunnel between Westmead and Sydney Olympic Park, excavation and civil works for new metro stations in the Parramatta CBD and Westmead Health Precinct.
It also includes earthworks, civil structures, utilities and connecting tunnels for a maintenance and stabling facility at Clyde, and excavation and underground structures for the Services Facility at Rosehill.
MIDF Research said Gamuda Australia Ewan Yee guided that the group’s current tender book was about A$5bil to A$6bil (RM15.8bil to RM19bil) in various stages from expression of interest to the actual tendering process.
“Gamuda’s plan over the next three to five years is to be actively involved in the renewable energy sector and to expand its geographical reach, starting with the state of Queensland,” it said.
Furthermore, Gamuda will be tapping into the expertise of TunSol to take on pumped hydro projects.
Chief strategy and growth officer Jarred Hardman also said Gamuda Australia’s go-to-market strategy is a three-prong approach through build, partner and invest, which are to identify investment opportunities and securing shovel-ready projects for delivery in the financial year 2025 (FY25)-FY26.
It is building greenfield portfolio of sites for construction in FY26-FY28 with the initial focus on solar and battery energy storage system projects and exploring opportunities in pumped hydro.
It is also using innovative partnering models to secure international experts in the hydro sector and working in partnership with DTI.
