PETALING JAYA: Analysts remain optimistic on Gamuda Bhd
’s job prospects, saying that its recent share price weakness presents a buying opportunity.
Kenanga Research said the recent sell-down on construction stocks, triggered by concerns over the US’ AI chips restriction, presents a good opportunity to accumulate Gamuda shares.
“We believe the earnings impact, in the worst case, will not be material as data centre jobs only account for 7% of Gamuda’s current outstanding order book of RM37bil.
“Our financial year ending July 31, 2025 (FY25)-FY26 new job wins assumption of RM17bil-RM20bil includes RM3bil each from data centre projects.”
It noted that Gamuda and its joint-venture partner Ferrovial Construction had been appointed for the second time as Early Contractor Involvement (ECI) partners for a pumped hydro project in Australia.
With these two pumped hydro projects and a metro project - SLR East-Linewide, its potential order book in Australia this year is around RM20bil, it said.
Under the fresh five-month ECI deal, Gamuda’s joint-venture (JV) will develop an engineering, procurement and construction framework for delivering the project which is called Capricornia Pumped Hydroelectric Storage.
Gamuda Australia CEO Ewan Yee has said that the landmark project underscores the company’s commitment to Queensland’s renewable energy future while expanding its presence across Australia.
Kenanga noted that so far, this was the third project for the Gamuda-Ferrovial JV.
The first contract was secured in June 2022 for the main package of works on the Coffs Harbour Bypass.
They were also appointed as ECI partners for the Oven Mountain Pumped Hydro project in New South Wales in November 2024, it noted.
In its report to clients, Hong Leong Investment Bank (HLIB) said overall, it viewed this development positively as cementing yet another orderbook expansion year. It is making no change in forecasts and maintaining a “buy” call on the stock with an unchanged target price of RM5.50.
“We maintain a “buy” rating with unchanged target price of RM5.50, based on 10% discount to our sum-of-parts value of RM6.12."
HLIB said it remained positive on the stock given its orderbook upcycle from high-certainty pipeline and growing leverage into Australian renewable energy space.
Post-selldown, the stock trades at FY26/FY27 price to earnings multiple of 18 times/14.8 times which is undemanding, in our opinion, backed by its robust orderbook and earnings upcycle phase, said HLIB.
On Gamuda’s newest project, it said upon the conclusion of this ECI contract in five months, Gamuda-Ferrovial JV could formalise an engineering, procurement and construction (EPC) contract with an estimated contract value of A$2.87bil.
Recall that the company is also executing an ongoing ECI phase for the Oven Mountain Pumped Hydro project and expects to formalise the EPC contract in late 2025, it said.
"On top of this, Gamuda through the Urban Leap consortium is also one of two shortlisted bidders in the running for SRL East linewide package to be awarded in 2025 as well."
HLIB also noted that if successful, these three mega jobs could provide Gamuda an effective orderbook uplift of around RM20bil.
“Not forgetting, there are other work shortlisting in the transmission & smaller scale RE projects in Australia, which could further prop up its orderbook.
“Australia aside, we gathered that the Sabah water project (RM3bil-RM4bil)- which is also a high-certainty pipeline - may come into its orderbook in the next few months.”
