UOBKH Research has raised Gamuda’s financial year end 2025 (FY25) and FY26 earnings forecasts by 5% and 4%, respectively.
PETALING JAYA: Gamuda Bhd
’s latest sizeable contract win in Taiwan has led most analysts to maintain their earnings forecasts on the group with a higher target price (TP) of between RM9.30 and RM9.60 per share.
According to UOB Kay Hian (UOBKH) Research, the RM4.3bil construction turnkey package from the New Taipei City government to design and build the Xizhi Donghu Mass Rapid Transit (MRT) will boost Gamuda’s current order book to a record high of RM28.7bil.
“It is also on track to reach Gamuda management’s target of a RM30bil to RM35bil order book by end-2024 and RM40bil to RM45bil by end-2025.
“The management remains optimistic that several domestic and overseas projects will materialise in the upcoming months, which include a bundle of domestic and overseas projects,” the research house said in a report yesterday.
The latest contract win between Gamuda (7% stake) and its joint-venture partners is expected to commence later this year with a seven-year construction period.
UOBKH Research said: “Assuming a pre-tax profit margin of 8%, we expect this project will contribute an additional pre-tax profit of RM49mil per annum (3% of our 2025 earnings forecast) over the project period.”
Meanwhile, at a current market cap of RM24.1bil, Gamuda appeared to be the 20th largest stock on Bursa Malaysia, the brokerage firm noted.
The research house also envisaged Gamuda, which ranked 20th in market cap is likely to feature as a FBM KLCI constituent at the November review.
It may also catalyse a potential valuation rerating as better trading interest may arise from foreign investors and exchange traded fund-linked funds, added UOBKH Research.
The research house has raised Gamuda’s financial year end 2025 (FY25) and FY26 earnings forecasts by 5% and 4% respectively to factor in progress billing from recently-secured Xizhi Donghu MRT project in Taiwan and Boulder Creek wind farm project in Australia.
Maybank Investment Bank (Maybank IB) Research, in a note to clients, described the new contract win in Taiwan as a positive surprise.
The contract, which also comes with RM8.1bil of additional work in about three years, will sustain the work momentum for at least the next 10 years and will further strengthen the group’s order book as well as earnings visibility.
Maybank IB Research has maintained its earnings forecasts having imputed RM20bil job win assumption for FY25, but raised the stock’s TP to RM9.60 a share from RM8.70 previously.
Meanwhile, CIMB Securities Research said Gamuda has solidified its positioning within Taiwan’s construction market, and in particular, its expanding metro systems.
The latest contract win also represents the group’s seventh construction win in the country.
“To be clear, the RM8.1bil additional share of works that Gamuda is entitled to is just an estimate based on prevailing costs today.
“More importantly, it is still subject to final negotiations and the availability of funding from the Taiwan government.
“Plus, the final contract value could be adjusted upwards to reflect any spikes in materials cost,” said the research house in a report.
Taken together, CIMB Research expected Gamuda to achieve a pre-tax margin of 8% from the project.
Based on its RM3.2bil share of the first contract, this works out to total pre-tax profit of RM344mil, or RM49mil per annum over a seven-year period.
The research house has maintained a “buy” call on the stock with a TP of RM9.30 per share.
