• The John Holland-Gamuda Joint Venture has been awarded a design and construct contract for the M1 Motorway Extension to Raymond Terrace (Black Hill to Tomago).

• The project was awarded by Transport for New South Wales, the procurement entity for New South Wales Government in Australia. Gamuda has a 40% stake in the joint venture with John Holland owning the larger 60%.

• The contract is worth AUD1bil (RM3bil). We believe that the contract will take 4 years to complete. We estimate Gamuda’s share of PBT from the contract to be RM30mil per year. This is 4% of Gamuda’s FY24F net profit.

• The JV will build the 10km southern section that extends from Black Hill to Tomago, with major interchanges at Black Hill, Tarro and Tomago. There will also be 9 bridges including a 2.6km viaduct across the Hunter River and floodplain.

• Planning and detailed designs will commence immediately while site investigations and utilities works will begin in mid-2023. The extension is expected to be opened to traffic in mid-2028.

• We maintain our forecasts as the award is within our FY23F order book replenishment assumptions of RM16bil. We expect new contracts to come from Australia (Suburban Rail Loop East and renewable energy infrastructure projects) and Malaysia (CMC303 of Mass Rapid Transport 3, reclamation of Penang South Island and flood mitigation projects).

• Gamuda currently trades at a fair 12.6x FY24F PE, near its 5-year historical average of 12x.

Source: AmInvest Research - 23 Dec 2022