Gamuda on track to meet RM25b orderbook target, say analysts

• Maybank Investment Bank Bhd (Maybank IB) said that Gamuda winning the contract to design and build the Kaohsiung Mass Rapid Transit (MRT) metropolitan line has lifted the group’s outstanding orderbook by 15% to RM23.6 billion by end of this year and further strengthened its earnings visibility.

KUALA LUMPUR (Oct 26): Gamuda Bhd is a step closer to achieving its orderbook target of RM25 billion in the next three to 15 months, following recent job wins from Taiwan’s Kaohsiung City government worth RM3.45 billion, according to analysts.

Gamuda's latest and largest contract win in Taiwan also saw its shares open higher at RM4.61 in early trade before reaching an all-time peak of RM4.68 on Thursday. At 10.49am, shares in Gamuda were still up four sen or 0.87% to RM4.64, valuing the group at RM12.57 billion.

Maybank Investment Bank Bhd (Maybank IB) said that Gamuda winning the contract to design and build the Kaohsiung Mass Rapid Transit (MRT) metropolitan line has lifted the group’s outstanding orderbook by 15% to RM23.6 billion by end of this year and further strengthened its earnings visibility.

“We view this E&C (engineering and construction) win positively, being Gamuda’s first win for the financial year of 2024 (FY2024),” Maybank IB said in a note on Thursday.

The job win for Taiwan MRT has brought Gamuda’s outstanding orderbook in Taiwan to RM4.9 billion or about 21% of its total outstanding book of RM23.6 billion by end of 2023.

“This win also brings Gamuda a step closer to its RM25 billion job win target in the next three to 15 months,” it noted.

Therefore, Maybank IB has maintained its earnings forecasts for Gamuda with a “buy” call and a target price (TP) of RM4.80.

“We remain upbeat on Gamuda’s prospects for major E&C jobs in Malaysia and overseas.

“Assuming 8% pre-tax margin for this new contract, we estimate RM194 million net profit (or 7.3 sen of earnings per share) contribution into FY2033,” it added.

RHB Investment Bank Bhd also kept its “buy” call and a TP of RM5.31 on Gamuda, with unchanged earnings forecast as the latest job win is within its FY2024 job replenishment assumption of RM15 billion.

“A further rerating catalyst would be Gamuda’s potential to win the RM4-RM6 billion MRT3 systems package after being prequalified for the job.

“Additional upsides may come from an earlier-than-expected award for the remaining package of the Suburban Rail East Loop project in Australia,” said RHB.

Other upcoming potential wins for Gamuda may also include the Penang Light Rail Transit, Phase 1B of the Pan Borneo Highway Sabah and another infrastructure job in Taiwan.

Gamuda has also hinted at another outstanding sizeable MRT tender in Taiwan in the next six months, said CGS-CIMB Research.

“We believe this is a result of the strong reputation it gained over the years in Malaysia, having completed MRT Line 1 and 2,” CGS-CIMB said.

CGS-CIMB said that Gamuda’s RM25 billion in total new orders in FY2024-FY2025 are largely within its forecasts, thus, the research house reiterated its “add” call and a TP of RM5.65 on Gamuda.

Notably, Gamuda has recently revised its target to double its revenue in FY2024 to RM17-RM18 billion, which is more aggressive than its earlier guidance of RM13 billion.

“It said this is on the assumption of faster recognition of its existing orderbook, more than doubling of its property revenue to RM6 billion, backed by lumpy recognition of RM6.7 billion unbilled sales for projects in Singapore, the UK and Australia and strong take-ups for its quick turnaround projects,” it said.

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