• Gamuda and Conlay Construction Sdn. Bhd. (Conlay) will construct a 187.5MW Ulu Padas Hydroelectric Power Plant with a total cost of RM3.1bn.

• The project boosted Gamuda’s orderbook by RM2.3bn or 8% to RM31bn and it is expected to contribute to its earnings beginning FY25F.

• We anticipate further growth in its domestic orderbook, driven by the impending finalisation of the Mutiara Penang LRT and the potential addition of two data centre projects.

• We reiterate our BUY recommendation on Gamuda with SOPderived TP of RM9.82, implies a 21x PER on FY25F EPS.

3rd Contract Win in FY25

Gamuda announced that it secured a contract from Upper Padas Power Sdn Bhd (UPPSB) for the design and construction of the 187.5MW Ulu Padas Dam in Tenom valued at RM3.1bn. The project will be executed by an unincorporated JV between Gamuda and Conlay that hold 75% and 25% interest respectively. This effectively boosted its orderbook by RM2.3bn or 8% to RM31.0bn, equating to 2.3x FY24 revenue. This is also its third contract win in FY25, bringing new job wins to RM6.2bn or 41.3% of 1HFY25 target of RM15bn.

Elevate Gamuda’s Renewable Portfolio

Note that the project is owned by UPPSB which is a JV comprising Gamuda (45%), Sabah Energy Corporation Sdn Bhd (40%), and Kerjaya Kagum Hitech JV Sdn Bhd (KKHJV) (15%). It is scheduled to achieve commercial operation by 31 December 2030. Upon completion, the Ulu Padas Dam will produce an estimated 1,052GWh of renewable energy annually, increasing Sabah’s dependable capacity by around 15%. The project is backed by a 40-year power purchase agreement with Sabah Electricity Sdn Bhd as the offtaker, positioning a secured revenue stream of over RM400mn annually at an estimated tariff rate of RM0.38/kWh upon operation. Besides that, the Letter of Notice (LON) granted to UPPSB not only authorizes the core hydroelectric development but also provides the option to incorporate an integrated floating solar solution.

Maintain a BUY with TP of RM9.82

Maintain BUY on Gamuda with SOP-derived TP of RM9.82. We favour the company due to: 1) a strong earnings outlook bolstered by substantial outstanding orderbook of RM31.0bn and unbilled sales of RM7.7bn, 2) the company's solid presence in the overseas construction market, and 3) the promising rollout of domestic infrastructure projects.

Source: BIMB Securities Research - 28 Oct 2024