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Gamuda looks set to be new FBM KLCI constituent - analyst

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Publish date: Mon, 04 Nov 2024, 12:25 PM

KUALA LUMPUR: Gamuda Bhd is in a favourable position to be included into the FTSE Bursa Malaysia KLCI (FBM KLCI) Index in the upcoming semi-annual review of the benchmark index in December, said CIMB Securities Sdn Bhd.

The research firm said this based on Gamuda last traded price of RM8.49 on Oct 30, 2024, with its market capitalisation worth RM24 billion.

"Concurrently, this would further boost its visibility among foreign investors, who held 27 per cent of the group's shares as of Aug 30, 2024," it said in a research note today.

CIMB Securities maintained its "Buy" call on the stock with a target price of RM10.20 a share.

At 11:32am today, Gamuda was among the top gainers as its share price rose 1.9 per cent or 16 sen to RM8.64, valuing the company at RM24.4 billion.

The share price continued its uptrend following the award of a RM451 million contract to build a data centre (DC) in Cyberjaya, lifting its cumulative project wins for financial year ended July 31, 2025 (FY25) year-to-date to about RM6.7 billion.

The new contract came just a week after it secured a RM3.05 billion contract for a 187.5 megawatt (MW) hydroelectric project in Sabah  to act as the total development contractor (TDC).

By extension, CIMB Securities said the new contract increased the group's outstanding order book to RM31.4 billion, suggesting some upside risk to its end-2024 target of RM30-35 billion.

"Gamuda's work scope for the Cyberjaya DC project involves the foundation, civil and structural, and architectural elements. "As this fast-tracked project (build only) is slated for completion by the first quarter of 2026, we estimate that it could yield attractive pre-tax margins of 10 to 15 per cent," the firm said.

As the group's contracting momentum shows no signs of slowing down, CIMB Securities raised its new contract win assumptions for FY26 by 25 per cent to RM25 billion, similar to the projected amount for FY25.

It noted that the optimism is underpinned by RM15 billion worth of high-conviction job prospects over the next one to two quarters, of which DC projects account for about RM3 billion.

The firm also noted that Gamuda is poised to clinch additional water infrastructure works that are tied to the construction of the Ulu Padas Hydroelectric Dam with combined value of works at RM5 billion.

"Other major job prospects include the Penang LRT (RM5 billion), Pan Borneo Sabah Phase 1B, and Sarawak's Northern Coastal Highway.
 

"Leveraging its expertise in handling bulk water infrastructure works, we also expect Gamuda to emerge as a frontrunner for the RM4 billion Sungai Perak Raw Water Transfer Scheme, one of the standout projects under 2025 Budget," the firm said.

 

https://www.nst.com.my/business/corporate/2024/11/1129309/gamuda-looks-set-be-new-fbm-klci-constituent-analyst

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