Gamuda noted the power project involved the construction of a dam in the Tenom and Sipitang districts of Sabah.
PETALING JAYA: Engineering and infrastructure firm Gamuda Bhd
’s green-project footprint is set to become bigger.
This comes after Upper Padas Power Sdn Bhd (UPPSB), a unit of Gamuda’s 45%-owned joint venture UPP Holdings Sdn Bhd, was awarded the 187.5MW Ulu Padas hydroelectric dam project in Sabah last week.
Gamuda’s shares closed at RM7.35 yesterday, down six sen from last Friday’s close of RM7.41, after analysts said the project also paved the way for other hydroelectric projects. The stock is up 60.13% year-to-date.
CIMB Research said the project would boost Gamuda’s environmental, social and governance (ESG) credentials while its successful execution would open the doors for the company to tap into future hydropower projects in Sabah as well as Sarawak.
Maybank Investment Bank Research said: “ESG-wise, this represents a big step in its clean-energy growth plan, which comprises the development of more than 800MW of renewable energy (RE) assets”.
RHB Research said the project paved the way for Gamuda to strengthen its foothold in RE projects domestically.
Analysts expect Gamuda to get the lion’s share of the estimated total project cost of RM4bil during construction.
According to RHB Research, the amount attributable to Gamuda could be in the range of RM2.8bil to RM3.2bil.
Analysts said the, company would also stand to benefit from the floating solar solution required as one of the conditions of the project award from the Energy Commission of Sabah.
CGS International Research (CGSI Research) said it believed that the floating solar solution portion of the project provides further opportunities for Gamuda’s order book, which stood at RM27bil as of September 2024.
In addition, analysts expect the RM400mil in revenue per year from the project’s 40-year concession to contribute strong recurring income to the company from the financial year ending Dec 31, 2031.
CGSI Research said this recurring income to Gamuda over the 40-year period would help fill the void left by the sale of its toll-road business in 2022.
CIMB Research also expects further valuation upside to come from the recurring income.
UPPSB is expected to sign the power purchase agreement with Sabah Electricity Sdn Bhd and the contract for the construction of the hydroelectric dam before the end of the year, with the project to take six years to complete.
