MIDF Amanah Investment Bank Bhd (MIDF Research) and RHB Investment Bank Bhd (RHB Research) have reaffirmed their BUY recommendations for Gamuda Bhd, citing the company's robust project pipeline and international growth trajectory. MIDF Research has maintained a target price (TP) of RM10.68, while RHB Research holds a higher TP of RM11.67, reflecting potential upsides of 13.4% and 22%, respectively.
Gamuda's wholly owned subsidiary, DT Infrastructure (DTI), has been awarded an A$625 million (RM1.77 billion) engineering, procurement and construction (EPC) contract by Lightsource bp Renewable Energy Investments. The project involves constructing the 585MW Goulburn River Solar Farm in New South Wales, Australia. The solar farm, expected to be operational by December 2026, will generate enough renewable energy (RE) to power 225,000 homes while reducing carbon emissions by 910,000 tonnes annually.
MIDF Research noted that the project is a significant milestone in Gamuda's push for RE projects in Australia, aligning with its target to develop a 2GW portfolio of wind and solar projects over the next five years. RHB Research, meanwhile, highlighted that Gamuda's RE-focused projects now account for RM4.7 billion, or 15% of the company's total outstanding order book, which stands at RM31.8 billion.
The contract is set to commence in January 2025, with pre-tax profit margins anticipated in the range of 4% to 5%. Both research houses see minimal execution risks, citing DTI's track record, including its completion of the Chichester Solar Farm in Western Australia.
Gamuda's current order book is well-positioned within its 2024 target range of RM30 billion to RM35 billion. Management has set an ambitious goal of RM40 billion to RM45 billion by the end of 2025, with additional projects such as the Penang Light Rail Transit and Sabah's Upper Padas Hydroelectric Project expected to contribute significantly.
RHB Research emphasises the strong prospects in Australia's RE market, with A$25 billion worth of projects in the pipeline, spurred by the country's commitment to achieving 82% RE by 2030. MIDF Research sees Gamuda as a leader in Malaysia's construction sector, underpinned by its ability to secure major contracts both domestically and internationally.
