Clinches Metronet High-Capacity Signalling Project for AUD1.6bn

GAMUDA, in a joint venture with Alstom SA (ALSTOM) (GAMUDA:ALSTOM, 46:54), has secured a contract valued at AUD1.6bn (c.RM5.0bn) from the Public Transport Authority of Western Australia. This contract encompasses the following:

(i) The design, supply, installation, testing, commissioning, and maintenance of high-capacity signalling technology for Perth’s

Suburban Rail Network.

(ii) Upgrading the existing signalling and control systems to an integrated Communications-Based train Control System

Notably, ALSTOM, a French multinational renowned for its innovations in rail transport, has a significant global footprint in high-speed trains, metros, trams, and signalling systems. With over a century of established business presence in Australia, ALSTOM has a well-documented history of delivering major rail projects across the country.

This project is expected to contribute an effective stake revenue of AUD737mn (c.RM2.3bn) to GAMUDA. It is slated for completion within 10 years, commencing in 2HCY24.

Our Views

Following the new job secured before GAMUDA’s FY24 closing, the YTD cumulative new job wins increased to approximately RM10.0bn. This also boosted GAMUDA’s outstanding order book to a record high of RM26.5bn, equivalent to 4.8x FY23 construction revenue.

Assuming a PBT margin of 5%, this project is expected to contribute a net profit of c.RM87.4mn throughout the construction period.

Impacts

No changes to our FY24-26F earnings forecasts as the YTD cumulative new job wins accounted for 83.3% of our FY24 job replenishment assumption of RM12bn.

Valuation

We maintain our SOP-derived target price at RM9.94, which includes a 3% ESG premium based on our 4-star rating. Maintain Buy call on the stock.

Source: TA Research - 19 Jul 2024