PETALING JAYA: Gamuda Bhd
’s long-term earnings visibility and recurring income base are expected to improve after accepting a revised project notification for a key Sabah hydropower development, although the near-term financial impact remains limited.
The integrated hybrid structure of the project signals incremental value creation over time, particularly as the group expands deeper into renewable energy assets.
Analysts polled by StarBiz highlighted that the development primarily reinforced Gamuda’s medium- to long-term fundamentals rather than delivering immediate earnings uplift.
Gamuda said Upper Padas Power Sdn Bhd (UPP), in which it holds a 45% stake, had accepted a revised letter of notification from the Energy Commission of Sabah for the Upper Padas Hydroelectric Project (UPHEP).
The revision incorporates a 150MWac floating solar plant alongside the 187.5MW hydro facility, forming an integrated hybrid project.
UPHEP carried a 40-year concession, with a scheduled commercial operation date on or before Dec 31, 2030, while the solar component, under a 25-year power purchase agreement (PPA), is expected to come onstream by Dec 31, 2031.
RHB Research, which reiterated its “buy” call on Gamuda with an unchanged target price (TP) of RM6.01 a share, said: “The acceptance of the revised letter of notification unlocks the next critical milestones, allowing UPP to finalise the PPA execution by Dec 31, 2026, and lock in optimal financing terms.”
It made no changes to its earnings estimates for Gamuda, pending the finalisation of PPA developments and other details.
Similarly, BIMB Research viewed the floating solar component as a longer-dated catalyst.
“We estimate the floating solar component alone could contribute RM80mil to RM220mil in incremental equity value to Gamuda, equivalent to about 1.3 sen to 3.7 sen per share.
“While this provides modest additional valuation support, the contribution is long-dated (post-2031) and contingent on final award and execution milestones, and is therefore not yet reflected in our TP.”
BIMB Research maintained its “buy” recommendation with an unchanged TP of RM6.29 a share.
“While the near-term earnings impact remains limited, the hybrid upgrade strengthens the group’s long-term earnings visibility and valuation support, underpinned by recurring income streams.”
MBSB Research echoed similar sentiments, emphasising the timing mismatch between value creation and earnings recognition.
“While the solar component enhances overall project value and provides incremental order book upside, the contribution is back-ended and unlikely to materially impact near-term earnings. Hence, we keep our earnings estimates unchanged.”
MBSB Research maintained its “buy” call on Gamuda, with a TP of RM5.60 a share.
