• Gamuda has been awarded a RM1.8bn contract to construct a 585MW solar farm in New South Wales, Australia

• YTD contract wins totalled RM8.5bn, bringing outstanding orderbook to c.RM31.8bn

• Maintain BUY rating and SOP-derived target price of RM11.10

Secured RM1.8bn solar farm project in Australia

Gamuda announced that its Australia subsidiary, DT Infrastructure, has been awarded an AUD625m (RM1.8bn) solar farm construction contract from Goulburn River Fund Pty Limited, a special purpose vehicle and wholly owned subsidiary of Lightsource bp Renewable Energy Investments Limited. The project scope includes the construction of the civil, structural, and electrical infrastructure for a 585MW solar farm in New South Wales, Australia. Works are expected to commence in Jan25, with a project duration of 24 months.

Within assumption, YTD new wins totalled RM8.5bn

We estimate this project to fetch a 4–5% profit before tax (PBT) margin, in line with the margins for small-scale overseas construction projects, contributing c.RM90m PBT over FY25–27E. Inclusive of this contract, YTD new wins totalled c.RM8.5bn, representing 47% of our RM18bn order replenishment assumption for FY25E. With this contract, Gamuda’s outstanding order book has grown to RM31.8bn, advancing towards the management’s target of RM40-45bn order book by end-CY25. With Gamuda’s growing portfolio in Australian renewable energy (RE) projects, the group is well positioned to ride onto Australia’s RE ambition to achieve 82% generated capacity from renewable energy by 2030. This transition is expected to drive an annual deployment of c.6GW of solar and wind energy projects, providing contract replenishment opportunities of AUD25bn (RM71bn) over the next 2 years. We are also expecting near-term order wins from local projects, including Penang LRT (c.RM5bn), Sabah water treatment plant (c.RM3bn), and data centre projects.

Reiterate BUY with TP of RM11.10

We do not change our earnings forecast; this contract falls under our replenishment assumptions. We maintain our BUY rating and SOP-derived target price unchanged at RM11.10. Key risks to our BUY call include a delay in work progress, slower contract awards, weaker-than-expected property sales, and project cost overruns.

Source: Philip Capital Research - 17 Dec 2024