Secures Two Jobs for One Particular Project

GAMUDA has been awarded two separate contracts: one from Sime Darby Property Sdn Bhd, a subsidiary of Sime Darby Property Bhd (SIMEPROP), and another from Pearl Computing Malaysia Sdn Bhd (PCM), a subsidiary of Raiden APAC Pte. Ltd., which is part of a U.S.-based multinational technology corporation. These contracts are for the construction of a hyperscale data centre in Elmina Business Park with a combined value of RM1.7bn, intended for use by PCM.

Our Views

We are optimistic about the two new contracts secured by GAMUDA, which expand its footprint in data centre construction. With these new contracts, GAMUDA's total outstanding order book is estimated to reach approximately RM26.3bn, translating to 4.8x the FY23 construction revenue. Assuming a PBT margin of 9%, these projects are expected to contribute a net profit of RM116mn throughout the construction period.

The inclusion of these new contracts also increases the proportion of data centre projects to approximately 8.4% of GAMUDA's outstanding order book portfolio. We anticipate significant growth in the data centre sector for GAMUDA, leveraging its next-generation industrial building systems and expertise in AI and Internet-of-Things-enabled data centres, which command higher project values due to their complexity.

Impacts

No changes to our FY24-26F earnings forecasts as the new job wins fall within our job replenishment assumption of RM12bn for FY24.

Valuation

We maintain our SOP-derived target price at RM6.18. However, we believe the stock is fairly valued after the recent rise in its share price. Downgrade to Sell.

Source: TA Research - 27 May 2024