TA Research trimmed its FY26 Vietnam property sales forecasts to account for regulatory-related launch delays.
PETALING JAYA: The fall in Gamuda Bhd
’s recent share price could be driven more by sentiment rather than fundamentals.
According to TA Research, the company’s earnings visibility remains strong, anchored by a record-high outstanding order book of RM45.9bil and RM8bil in unbilled property sales.
However, its management noted that most of Gamuda’s order books are at the early stage of an “S” Curve, meaning mobilisation and preliminary works will result in slower revenue and profit recognition.
Notwithstanding this, its earnings are effectively locked in, and Gamuda’s outstanding order book of RM45.9bil translates into a robust 4.5 times its financial year 2025 (FY25) construction sector revenue, TA Research said.
“Key factors weighing on the stock include delta-hedging-related selling pressure arising from Permodalan Nasional Bhd’s recent issuance of secured exchangeable sukuk, which is exchangeable into Gamuda shares, and heightened foreign selling pressure, which has weighed broadly on large-cap construction and infrastructure names,” it added.
Another potential factor is the recent Sunway Group and IJM Corp Bhd takeover proposal, which sparked concerns over potential shifts in competitive dynamics within Malaysia’s mega infrastructure and property development space, it noted.
“In our view, the selldown appears overdone. At the current level, Gamuda is trading at some 5.2 times FY27 earnings per share, representing a circa 24% discount to its five-year historical average price-to-earnings ratio of about 20 times.
“We see potential for a valuation re-rating as technical pressure abates, execution progresses along the S-curve, and earnings recognition catches up with its sizeable and high-quality order book,” it noted.
The S-curve effect may weigh on Gamuda’s near-term earnings while boosting medium-term visibility, it added.
“We view this as a timing issue rather than a structural concern, with earnings largely locked in but back-end loaded. As such, we have revised down our FY26 order book burn-rate assumptions and re-phased the backlog into FY27-FY28 to better reflect execution realities,” it said.
TA Research also trimmed its FY26 Vietnam property sales forecasts to account for regulatory-related launch delays.
“Consequently, our earnings forecasts are revised downward by 13.5% for FY26, while FY27 and FY28 forecasts are raised by 2% and 9.5%, respectively,” it added.
Its sum-of-parts-derived target price has been lowered to RM6.17 from RM6.58 previously, with a “buy” call intact.
