MIDF Research said Gamuda’s management is optimistic on the pipeline of data centre projects.
PETALING JAYA: Gamuda Bhd
’s acquisition of about 389 acres of freehold land in Springhill Industrial Park in Port Dickson, Negri Sembilan aligns with the group’s expansion of its digital infrastructure business, say analysts.
Gamuda, via its wholly-owned indirect subsidiary Gamuda DC Infrastructure Sdn Bhd, is paying RM424.4mil for that parcel of land from West Synergy Sdn Bhd, which is a 60:40 joint-venture between MUI Properties Bhd and Chin Teck Plantations Bhd.
Gamuda intends to use the land to develop cloud or data centre infrastructure.
Public Investment Bank Research (PublicInvest Research) said the purchase price of RM424.4mil is fair, translating to about RM25 per sq ft and is in line with the average price of RM31 per sq ft for land transactions recorded in the vicinity over the past 12 months.
The acquisition will be funded via internally generated funds. To recap, Gamuda has a cash pile of RM3.6bil and low net gearing of 0.39 times as of the first quarter of its 2025 financial year.
“We view this development positively, as it aligns with the group’s strategic push to make the digital infrastructure business its third core business, following construction and property development.
“We maintain our ‘outperform’ rating on Gamuda, with an unchanged target price of RM5.20 adjusted post-bonus issue,” PublicInvest Research said in a report.
Meanwhile, based on the land size, MIDF Research estimates that it could cater for about 500MW to 600MW of data centre developments, which may translate to a construction size of RM15bil to RM18bil.
According to MIDF Research, Gamuda’s management is optimistic on the pipeline of data centre projects and has been expanding its capacities to cater for the stronger demand.
“It has recently expanded both its Digital IBS facilities and the group now has eight data centre teams ready for up to eight simultaneous data centre construction projects.”
The research firm noted that Gamuda’s outstanding order book currently stood at RM31.8bil, well within management’s 2024 target and on track for its RM40bil to RM45bil target by end-2025. This is after taking into account an expected burn rate of RM12bil to RM13bil annually.
Upcoming project awards that are expected to provide an extra boost to Gamuda’s already bulging order book include the Penang light rail transit, a water supply scheme in Sabah and the potential conversion of several renewable energy early contractor involvement into engineering, procurement, construction, and commissioning contracts in Australia.
“Gamuda remains our favourite for the construction sector, backed by its successful overseas expansion plan; its consistency in clinching sizeable jobs and being a frontrunner for most mega-projects in Malaysia. Maintain buy,” said the research firm.
It has adjusted the stock’s target price to RM5.42 from RM10.68 previously after taking into account Gamuda’s one-for-one bonus issue on Dec 23, 2024.
The existing title of the land is categorised for agricultural use and one of the conditions precedent for the deal to go through is converting the land for industrial use. The acquisition is expected to be completed by end-July 2025.
The land is located within Malaysia Vision Valley 2.0, a state-led development initiative aimed at advancing the country’s progress in digitalisation and high-tech digital infrastructure development.
