PETALING JAYA: Gamuda Bhd
’s recent contract win in Australia, valued at approximately RM700mil, is anticipated to strengthen the earnings visibility of the domestic engineering and construction (E&C) group.
In addition, the new project, which involves the design and construction of a wind farm, will allow Gamuda to diversify beyond its rail-based projects in New South Wales and further expand its presence in Australia’s renewable energy (RE) sector.
As such, most brokerages remained optimistic about the company’s prospects.
Gamuda last Friday announced that its 100%-owned subsidiary, DT Infrastructure (DTI), had secured a contract worth A$243mil (or RM702mil) to design and construct the Boulder Creek wind farm in Queensland.
The scope of works included 38 turbines with a generating capacity of 228 megawatt (MW) or six MW per turbine.
The project is expected to commence in late-2024, and complete around the third quarter of 2027.
Maybank Investment Bank (Maybank IB) Research, which has reiterated its “buy” call on Gamuda with an unchanged target price of RM8.70, said it viewed the contract win positively.
“We estimate this new contract has lifted Gamuda’s outstanding E&C order book to RM25.5bil from RM24.8bil as at end-July 2024,” the brokerage said.
“Outstanding jobs in Australia are now RM11.5bil (45% of the total RM25.5bil). This win also brings Gamuda a step closer towards its RM30bil job win target for the financial year ending July 31, 2025 (FY25) and FY26,” it added.
Similarly positive, CIMB Research said through DTI, Gamuda would make further inroads into Australia’s RE market.
“Apart from solar farms, we understand that the group is eyeing several opportunities within the solar and pump hydro markets.
“From an environmental, social and governance optic, it will solidify Gamuda’s growing footprint for green infrastructure builds as DTI will work alongside the rural communities as the project progresses,” the brokerage wrote in its report yesterday.
CIMB Research has maintained its “buy” call on Gamuda, with an unchanged target price of RM9.30.
“Overall, Gamuda expects to crystallise RM15bil worth of fresh order book within the next one to two quarters.
“Aside from RE initiatives in Australia, the Penang light rail transit, Ulu Padas Hydro (inclusive of a water supply component) and data centre works are among the few near-term local job prospects that could bear fruit,” it said.
According to CGS International (CGSI) Research, the wind-farm project DTI secured would enable Gamuda to diversify out of its rail-based projects in New South Wales.
It noted that Gamuda had guided for a pre-tax margin of 5%, similar to those of smaller scale and lower risk Australian projects.
“With just three months left till the end of the year, this win will help Gamuda achieve its order-book guidance of RM30bil to RM35bil by end-2024.
“Gamuda appears confident of achieving the higher end of this guidance,” CGSI Research said.
Year-to-date, the group’s total contract wins stood at around RM10bil, bringing its order book to RM25.5bil as at end-September 2024.
“The pipeline in 2025 looks equally promising in our view, as Gamuda is guiding for a RM40bil to RM45bil order book by end-2025, driven by overseas and data centre projects,” CGSI Research said.
It kept its “add” call on Gamuda, with a target price of RM9.50.
MIDF Research noted the wind-farm project had lifted Gamuda’s order book to a new high.
Maintaining its “buy” call and target price of RM9.01 on Gamuda, MIDF Research said the counter remained its favourite stock within the construction sector.
This is backed by the company’s successful overseas expansion plan; consistency in clinching sizeable jobs and being a frontrunner for most mega projects in Malaysia.
“Being a premium builder of data centres, the group now focusses only on hyperscale data centres, underpinning sizeable order-book replenishments,” it added.
