PETALING JAYA: Gamuda Bhd
stands a high chance to snag the engineering, procurement, construction and commissioning (EPCC) works for the Northern Perak Water Supply Scheme (NPWSS), a RM5bil integrated water infrastructure project, in which a 40-year agreement to supply surplus treated water to Penang was announced on Wednesday.
Besides supplying to Penang, the NPWSS aims to enhance the longer-term water security supply of northern Perak while supporting the region’s future industrial development.
Analysts covering the stock believe the company has a high probability of securing the EPCC contract due to its expertise.
“Gamuda is not new to running and building water infrastructure/concessions; for instance, Syarikat Pengeluar Air Selangor (Splash), the water treatment concessionaire now owned by the state, used to operate the Sungai Selangor Dam and the Rasa and Bukit Bandong water treatment plants,” CGSI Research pointed out.
Gamuda sold its 40% of Splash to Selangor in September 2018. The NPWSS project was awarded by the Perak government to Khazanah Air Perak Sdn Bhd, a 50:50 joint venture between Gamuda and Perbadanan Kemajuan Negeri Perak, last July.
CGSI Research has reiterated an “add” call on the stock with a target price (TP) of RM5.78 on the strength of Gamuda’s diversified order book and visible pipeline of contracts. The company had an order book of RM52.3bil as of May 2026.
According to RHB Research, which has kept a “buy” call but lowered the TP to RM6.11 from RM6.19 to reflect the 11.75% hike in the RM1.70 per cubic m tariff every three years plus cost escalation pass throughs for chemical and electricity costs among others, said the EPCC works may come at a later stage, with the sale of treated water to commence in 2032.
MBSB Research expects the EPCC works to be awarded in the second half of financial year 2026, as the contract remains pending subject to Suruhanjaya Perkhidmatan Air Negara registration. It has maintained a “buy” recommendation with an unchanged TP of RM5.60 after cutting financial year ending July 31, 2026 (FY27) by 7% to reflect the slower progression of the project’s early stage.
“Gamuda remains our top construction pick, supported by its record RM52.3bil order book and improving earnings visibility. As 75% of projects remain at the mobilisation and early execution stages, we believe FY27 will mark the beginning of stronger earnings upcycle,” it added.
“We believe the eventual NPWSS EPCC award would provide further upside to order book replenishment, while the water concession enhances Gamuda’s recurring income profile with an estimated 10% equity internal rate of return,” it said.
Hong Leong Investment Bank Research, which has maintained a “buy” call and TP of RM5.27, said the supply of treated water could yield an average annual profit after tax of RM100mil over its first 10 years of operations (Gamuda’s share of profit: RM50mil).
