Gamuda’s performance continues to impress

The property and construction conglomerate has thus far secured more than RM6bil worth of new contracts for FY24.

PETALING JAYA: Fresh from recording a two-fold increase in its first-quarter (1Q) revenue, Gamuda Bhd remains confident about meeting its new order-win target of RM25bil for its financial year ending July 31, 2024 (FY24) and into FY25.

The property and construction conglomerate has thus far secured more than RM6bil worth of new contracts for FY24.

Its construction orderbook was valued at RM25.8bil as of Wednesday, after including the job win for the West Coast station and tunnels of Singapore’s Cross Island Line phase two worth RM1.8bil announced on the same day.

This translates to a cover ratio of 4.2 times, RHB Research said in a report on the company.

The research house said the potential new jobs for Gamuda include the second package of the Suburban Rail Loop East in Melbourne, Australia, the Penang Light Rail Transit project and phase 1B of the Pan Borneo Sabah Highway.

Additionally, Gamuda was also recently shortlisted for a highway project in Melbourne, while the premier of New South Wales Chris Minns had proposed that the Rosehill Racecourse be transformed into a new metro station under the Sydney Metro West (SMW) project, RHB Research noted.“Gamuda’s tunnel boring machine launch site for the SMW project is located in the Rosehill area – spelling more potential opportunities for the group,” the research house said.

RHB Research reiterated a buy call “buy” on Gamuda, with a higher sum-of-parts (SOP)-based target price of RM5.66, compared with RM5.41 previously.

“A further re-rating catalyst would be faster-than-expected wins for local and overseas jobs – particularly for the Mass Rapid Transit 3 project which had its tender validity extended to March 2024,” it said.

Also optimistic about Gamuda’s prospects, CGS-CIMB Research place an “add” rating on the counter with an unchanged SOP-based target price of RM5.65.

Citing a post-result briefing, the CGS-CIMB Research said Gamuda reiterated its guidance of doubling its group revenue to RM17bil-RM18bil in FY24.

“We remain confident of Gamuda’s ability to execute its infrastructure projects in Australia, which has become an important market, contributing 47% (RM12.1bil) of its total orderbook of RM25.8bil as at December 23,” CGS-CIMB Research said.

“Gamuda aims to double its Australian revenue to a sustainable A$3bil per year in two to three years’ time but the challenge is to reduce its overheads, by offshoring some of the detailed design work to Malaysia to lower costs,” it added.

The research house noted there could potentially be a one to two percentage point margin uplift for Gamuda beyond the pre-tax margin guidance of 8% for its Australian projects.

Gamuda saw its revenue more than double to RM2.8bil in 1Q24 from RM1.3bil in 1Q23, as its revenue from overseas operations tripled to RM2.1bil. Its 1Q24 net profit was RM195.04mil, compared with RM1.17bil in 1Q23 when it recorded a gain of RM1bil from the divestment of its highway business.

The results were largely in line with market expectations, as UOB Kay Hian (UOBKH) Research pointed out.

Expecting Gamuda to post stronger results for FY24, the brokerage said: “The near-term outlook for the construction segment remains resilient, backed by a robust orderbook of RM24bil as of end-1Q24 and a pipeline of mega projects. The property division is also poised to record stronger earnings in FY24 on progressive recognition of unbilled sales.”

UOBKH Research maintained “buy” on Gamuda, with an unchanged SOP-based target price of RM5.64.

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