PETALING JAYA: Gamuda Bhd
’s share price recovery could gain further traction as strong contract wins and an anticipated earnings ramp-up reinforce its growth prospects, says Phillip Capital Research.
The research house said the group’s share price had recovered from a decline of more than 20% earlier this year, leaving it down less than 1% year-to-date.
Phillip Capital attributed the earlier sell-off to technical selling, following Permo-dalan Nasional Bhd’s US$300mil secured exchangeable sukuk – which is convertible into Gamuda shares – and concerns that Sunway Bhd’s previously proposed takeover of IJM Corp Bhd would create a larger competitor.
“In our view, the sell-off was more sentiment-driven than driven by any deterioration in fundamentals.
“Continued contract wins at the start of financial year 2027 (FY27) have reinforced order book momentum and supported the share price recovery,” it said.
Phillip Capital expects Gamuda’s core earnings to grow 43% in FY27, as projects secured progresses into their main construction phases. About 90% of the order book has yet to reach peak execution.
Taiwan’s mass rapid transit projects are also expected to contribute more meaningfully to earnings in FY27 following their design phases over the past two years.
Philip Capital expects an annual order book replenishment of RM35bil to RM40bil over FY27 to FY29, with the group targeting FY27 contract wins broadly in line with FY26.
Of the RM15bil secured so far, wins were evenly split between traditional sectors – including rail and highways – and newer sectors such as data centres (DCs) and renewable energy (RE).
This mix balances longer-term revenue visibility from traditional contracts – typically lasting more than three years – with faster revenue recognition from newer projects, generally completed within two years.
Phillip Capital highlighted DCs as Gamuda’s key domestic growth driver, with RM5.3bil in contract wins from Port Dickson, where it has secured all packages awarded to date.
It estimates that at least four additional DC campuses could be developed at the site, potentially generating RM15bil in construction value.
The research house believes Gamuda has a strong chance of securing the subsequent phases, given its incumbent status and familiarity with the site.
Beyond DCs, opportunities include the Northern Perak Water Supply Scheme, with an estimated engineering, procurement, construction and commissioning (EPCC) value of RM4bil.
Gamuda’s 50% concession stake could also provide recurring tariff income from 2032 onwards.
Moreover, the group’s 680-megawatt alternating-current hybrid solar and battery energy storage project under Malay-sia’s Corporate Renewable Energy Supply Scheme has an estimated EPCC value of RM2.7bil, with recurring income expected from 2029 through its 33% stake.
On another note, Gamuda Engineering Australia has a tender pipeline exceeding A$15bil, while its subsidiary DT Infra-structure (DTI) secured 47 contracts worth A$3.5bil in FY26.
DTI is targeting four key markets including rail, infrastructure, defence and energy, which could support future order book replenishment.
However, Phillip Capital expects gross profit margins to ease slightly in FY27 as lower-margin DC and RE contracts account for a larger share of revenue.
Meanwhile, property revenue growth is expected to become more meaningful from FY28, driven by a RM7bil sales target for FY27.
According to the research house, this target is supported by RM9.7bil of launches in Malaysia, Vietnam and Singapore.
The research house maintained a “buy” recommendation on Gamuda with an unchanged sum-of-the-parts-derived target price of RM5.80.
“Valuations are back near the five-year mean price-earnings ratio, and we see earnings delivery as the key catalyst moving forward,” it said, adding that solid earnings delivery could drive the next leg of share price re-rating.
