PETALING JAYA: Gamuda Bhd
has cultivated a stellar outperformance, lifted by compounding order book growth amid a sector upcycle and deepening exposure in key markets, says UOB Kay Hian (UOBKH) Research.
The group secured RM17.6bil worth of contracts in financial year 2025 (FY25) and RM2.6bil order book in FY26 thus far, lifting the outstanding order book to a record-high RM39.8bil.
In a note to clients, the research house said, “Assuming a RM3bil quarterly order book burn rate, Gamuda has to secure at least RM8bil to RM9bil to meet management’s order book guidance of RM40bil to RM45bil by end-2025, which will likely be fulfilled by several tender outcomes that are pending finalisation.”
Assessing Gamuda’s existing project pipelines, UOBKH Research noted earnings growth in FY25 (14%) is relatively modest despite clinching over RM18bil in contracts.
This is mainly due to multiple flagship projects such as the Penang Mutiara Light Rail Transit Segment 1, the Upper Padas Hydroelectric Dam in Sabah, data centre works and Taiwan’s rail projects, namely Xizhi Donghu and Kaohsiung MRT, which have yet to meaningfully scale up.
“We expect these projects to chart accelerated progress billings in FY26 to FY27, well mirrored in our exponential earnings growth forecast of 20% to 36%,” the research house added.
Meanwhile, following an impressive share price rally that has risen 244% since 2024, Gamuda is now trading at 22 times the FY26 price-to-earnings forecast.
The trailing valuations also trace ex-financials KLCI components’ average of 22 times to 23 times (assumptions: consensus forward earnings; removing financial stocks as valuation matrices differ using book value).
“While such valuation premiumisation is fairly justified given its multi-year record-high order book andearnings upcycle, capital upside appears modest at this juncture.
“We opine that further re-rating requires significant earnings enhancement or above-expectations order book wins, which may materialise only by the second half of FY26,” said the research house.
Moving into FY26, UOBKH Research noted that Gamuda secured a RM2.6bil order book from two contracts last month.
“Based on the existing foreseeable pipeline, our FY26 order book replenishment assumptions of RM20bil to RM25bil are likely achievable, with potential upside risk from other domestic works and Australian renewable projects.”
UOBKH Research also pointed out the current record-high order book requires more time to be digested into exponential earnings delivery in FY26 to FY28.
It has downgraded Gamuda to a “hold” call, but with a higher target price of RM5.75 from RM5.55 previously following the impressive share price rally.
