CGSI Research said Gamuda’s year-to-date contract wins amounted to RM13.8bil for the financial year 2025.
PETALING JAYA: Analysts are optimistic about Gamuda Bhd
’s prospects, given its diversified order book, increasing data centre (DC) exposure and growing property business.
The construction group’s RM8.3bil contract win of the Penang Light Rail Transit (LRT) Segment 1 – Mutiara Line – was via its 60% stake in SRS Konsortium with two other Penang-based companies taking up an equal share of 20% each.
This implied a contract value of RM5bil attributable to Gamuda over the 72-month construction duration.
CGS International (CGSI) Research in a report said Gamuda’s year-to-date contract wins, including the Penang LRT project, amounted to RM13.8bil for the financial year 2025 (FY25).
This brings the group’s order book to RM37bil as of this month, it noted.
“We believe the company could win the contract for Sabah’s water treatment plant estimated at RM4bil to RM5bil by the end of this month,” added CGSI Research.
During the research house’s recent Malaysia Corporate Day event, Gamuda reiterated its RM40bil to RM45bil order book target for end-2025.
Hence, the group would need to win RM25bil worth of new orders in 2025 to hit the higher end of its target.
“We view this target as conservative and think incremental order book upside, which we believe is not priced in, could come from high margin DC wins for the land it recently acquired in Negri Sembilan,” said CGSI Research.
In a note to clients, Kenanga Research said: “While this new contract award is highly expected and long overdue, we are positive SRS Konsortium is able to start construction immediately and hence, job claim.”Recently, the transport minister mentioned that he did not rule out the possibility of SRS Konsortium bidding for the remaining two packages of the Penang LRT.
“With this contract win worth RM5bil for a 60% stake, Gamuda has secured a total of RM13.76bil new jobs year-to-date for FY25 against our FY25 new job wins assumption of RM14.5bil, and elevated its outstanding order book to a new high of RM37bil,” Kenanga Research noted.
More contracts are in the pipeline, such as Sabah’s water treatment plant, several DC awards and projects in Australia.
“We have fine-tuned our estimates as we raised our FY25 and FY26 job win assumptions to RM17bil and RM20bil, while increasing construction revenue assumption to RM11.5bil and RM15bil respectively,” said the research house.
However, Kenanga Research has toned down the group’s construction operating margin to 8.3% and 8.6%, respectively, as its previous assumptions of 9.5% and 10% were too optimistic.
Post-earnings revision, the research house has raised the stock’s target price (TP) to RM5.46 per share, up from RM5.40.
“We continue to like Gamuda for being in the driver’s seat of the Mutiara Line for the Penang LRT, its ability to secure new jobs in overseas markets, solid war chest after the disposal of its toll highways, strong earnings visibility underpinned by a record outstanding order book and making inroads into the renewable energy space,” the research house added.
Going forward, Hong Leong Investment Bank (HLIB) Research, in a report, said it expected Gamuda to continue digesting its high certainty project pipeline such as the Sabah water project and various early contractor involvement engagements in Australia.
“We gather Gamuda’s five-year target of doubling group revenue to RM30bil by FY28 is based on conservative domestic engineering and construction revenue forecasts ranging between RM3.9bil and RM4.6bil per annum, independent of potential pipeline,” it added.
HLIB Research has kept a “buy” call on the stock with an unchanged TP of RM5.50.
“We remain positive on the stock on the back of order book upcycle from high certainty pipeline, differentiated DC strategy and growing leverage into the Australian renewable energy space,” it said.
