Gamuda Berhad (Gamuda) is making significant strides with its Ulu Padas Hydroelectric Project, despite a recent setback at its Rasau site. On 6 September 2024, Gamuda, through its joint venture Upper Padas Power Sdn Bhd (UPPSB), accepted a Letter of Notification from the Energy Commission of Sabah for the development of the 187.5MW hydroelectric project. This development is expected to deliver approximately 1,052GWh of clean energy annually from its dam construction in Tenom and Sipitang, Sabah.
The project is set to commence construction in 2025, with a planned completion within six years, and a commercial operational date slated for 31 December 2030. The hydroelectric scheme will also incorporate a floating solar solution, operational by the end of 2031. The total cost of the project is estimated at RM4 billion, with Gamuda's share in the Engineering and Construction (E&C) segment valued at RM2 billion, potentially increasing its order book by over 8% from RM24.2 billion as of April 2024. This project will provide Gamuda with dual revenue streams: construction profits over the next six years and recurring income from power generation thereafter.
In light of these developments, several analysts have weighed in. Maybank Stock Broking House maintains a BUY call with a revised target price of RM8.00, reflecting a 11% upside from the current share price of RM7.41. The firm highlights the strong potential of Gamuda's long-term earnings from the project. RHB Stock Broking House also maintains a BUY recommendation with a target price of RM9.68, citing the project's role in enhancing Gamuda's position in the renewable energy sector. Kenanga Stock Broking House, in the same thinking as other analysts, has upgraded its call to MARKET PERFORM with a slightly increased target price of RM7.54, noting that while the project promises a steady stream of income, its full impact will be realised beyond the current forecast period.
Separately, Gamuda has encountered a challenge at its Sungai Rasau water supply scheme site in Puchong. A collapse of a pond embankment has halted construction activities. Despite this disruption, initial assessments suggest that the overall project completion date of June 2025 remains intact. The Rasau project, which was 15% completed as of April 2024, involves remaining works valued at RM1.7 billion.
