GAMUDA via a JV with a local partner, has won the AUD1.03bn (RM3.03bn) construction job for the northern section of the M1 Motorway extension in New South Wales (NSW), Australia. The latest job win raises its outstanding construction order book by 8% to a record RM16bn. We maintain our forecasts (as we have already assumed significant jobs win in FY23). Buy with a TP of RM5.15 based on 18x PER for its construction segment. We continue to like GAMUDA given: (i) the good chances of it securing the MRT3; (ii) its recent job wins in in Australia, Singapore and Taiwan depicts its competitiveness in the international market; (iii) its net cash position as of 1QFY23 providing it an edge to participate in public infrastructure projects on a PFI or deferred payment model; (iv) its strong earnings visibility underpinned by a record high outstanding order book of RM16b; and (v) its efforts in the renewable energy space in line with global sustainability goals.

GAMUDA, via a 40:60 JV with Australia-based construction giant John Holland Pty Ltd, has secured an AUD1.03bn (RM3.03b) contract from the New South Wales government to design and construct the northern section of the M1 Motorway extension from Black Hill to Tomago. GAMUDA’s effective share in the contract is AUD411m or RM1.21bn. The job spanning over six years comprises of the construction of: (i) a 10-km greenfield dual carriageway motorway between the M1 Motorway at Beresfield and Tomago, (ii) major interchanges at Black Hill, Tarro and Tomago, and (iii) nine bridges including a 2.6km viaduct across the Hunter River and floodplain.

This latest Australian job further boosted GAMUDA’s stature as an international contractor. We are positive on the new job win that has boosted its YTD job replenishment to RM2.5bn or 16% of our FY23F order book replenishment of RM15.5bn, and its outstanding order book by 8% to a record RM16bn. GAMUDA guided for a PBT margin of mid-to-high single-digit which is consistent with our assumption of 9%.

For the rest of the FY, we expect potential awards from: (i) the MRT3, (ii) PSI, and (iii) overseas markets including Australia (Suburban Rail Loop), Singapore and Taiwan.

Source: Rakuten Research - 23 Dec 2022