Kenanga Research said it also maintains Gamuda end-2025 outstanding order book target of RM40bil to RM45bil.
PETALING JAYA: Gamuda Bhd
’s latest contract win for a 585MW solar farm in Australia will likely bring the construction group’s outstanding order book to about RM31.8bil, say analysts.
On Monday, the group announced that its wholly-owned DT Infrastructure Pty Ltd (DTI) was awarded an engineering, procurement, construction and commissioning (EPCC) contract worth A$625mil (RM1.8bil) from Lightsource bp Renewable Energy Investments Ltd for the 585MW Goulburn River Solar Farm in New South Wales.
Kenanga Research in a report said it remained bullish on Gamuda given its ability to secure new jobs.
The latest contract is Gamuda’s fifth job win for financial year 2025 (FY25), the brokerage firm said.
It added that “Gamuda has secured a total contract worth RM8.47bil year-to-date against our new job win assumption of RM14.5bil”.
This is also the second job bagged for DTI in FY25.
With this job win, Kenanga Research said the group’s current outstanding order book has increased to RM31.8bil, well within its end-2024 target of RM30bil to RM35bil.
It noted Gamuda’s other jobs in the pipeline include Penang’s Light Rail Transit (LRT) Mutiara Line, Sabah’s water treatment plant, several data centre awards and projects in Australia.
Kenanga Research said it also maintains Gamuda end-2025 outstanding order book target of RM40bil to RM45bil.
The brokerage has an “outperform” call on the stock with a target price (TP) of RM10.80.
“We continue to like Gamuda for being in the driver’s seat for the Mutiara Line for the Penang LRT, its ability to secure new jobs in overseas markets and its solid war chest after the disposal of its toll highways,” it noted.
In addition, the group’s strong earnings visibility is underpinned by a record outstanding order book of RM30bil, and its inroads into the renewable energy (RE) space. RHB Research in a note to clients said Gamuda’s prospects are shining bright in Australia.
“Gamuda’s unit DTI’s latest solar energy segment job ties in well with the group’s aim to build up to a two GW portfolio (now at around 813MW as per our calculations) of wind and solar projects within five years in Australia,” it added.
Gamuda has A$25bil worth of RE projects in Australia it is eyeing, said RHB Research.
“This sits well with the need for six GW of wind and six GW of solar power annually for the next four to five years to meet Australia’s 82% RE target mix by 2030,” it noted.
Other remaining types of RE jobs in Australia that Gamuda can potentially win mainly include battery energy storage systems (BESS) and transmission lines for RE zones.
“Other upcoming wins that could enable Gamuda to meet our RM25bil new job win target include the Penang LRT (based on a 60% share of its share in the SRS consortium), the Sabah water supply scheme for Upper Padas Hydroelectric Project in Sabah, railway-related jobs in Australia, and possibly a few more data centres (DCs),” RHB Research noted.
The research house made no changes to its earnings estimates as the latest job win is within its FY25 job replenishment assumption of RM25bil.
As such, RHB Research’s TP of RM11.67 on Gamuda remains unchanged.
“We reaffirm our view that the stock remains undervalued, trading at a FY26 price-to-earnings (PE) of 18.9 times, which is not far from the 16 times PE seen during the 2017 upcycle when its outstanding order book was just RM7.4bil versus the latest estimated RM31.8bil,” said the research house.
Meanwhile, Hong Leong Investment Bank Research (HLIB Research) said the latest contract win secured by Gamuda’s Australian subsidiary DTI is proving to be an astute investment.
“Since the acquisition was completed in 2023, DTI has been a consistent contributor to the group, complementing Gamuda Australia, which focuses on over A$800mil sized packages as it delivers relatively smaller scale packages (significant in RM terms) as well as advancing the group’s exposure into renewables – multiple wind, solar and transmission projects secured,” HLIB Research noted.
The research house added Gamuda’s management had breathed a bullish tone at a recent briefing, expressing confidence of adding to its order book in the remaining weeks of 2024, comfortably ending at the higher side or potentially surpassing its RM30bil to RM35bil end-calendar year 2024 order book guidance.
HLIB Research has maintained a “buy” call with an unchanged TP of RM11.03.
“We remain positive on the stock on the back of the order book upcycle from a high certainty pipeline, differentiated DC strategy and growing leverage into the Australian RE space,” it said.
Furthermore, Gamuda is also up for a valuation rerating catalyst from the upcoming FBM KLCI entry.
