• Gamuda has been awarded a RM702m contract to design and build a 228MW wind power project in Australia
• This marks Gamuda’s first contract win for FY25, bringing outstanding orderbook to c.RM26bn; on track to achieve RM30–35bn orderbook by year end
• Maintain BUY rating and SOP-derived target price of RM9.20

Secured RM702m wind power turbine project in Australia

Gamuda announced that its Australia subsidiary, DT Infrastructure, has been awarded an RM702m design and construction contract for the Boulder Creek Wind Farm project from Aula Energy and CS Energy. The project scope includes the construction of a wind farm comprising 38 turbines with a combined generating capacity of 228MW. The contract, located in Queensland, Australia, is expected to commence in 4QCY24 and last 33 months.

On track to achieve its RM30–35bn order book target

We estimate this project will yield a 4–5% profit before tax (PBT) margin, in line with the margins for small-scale overseas construction projects. This translates to c.RM35m PBT over FY25–27E. This marks Gamuda’s first contract win for FY25, bringing the latest order book to c.RM26bn, or 2.5x FY24 construction revenue. In addition to this win, Gamuda is a step closer to achieving its RM30–35bn order book target by the end of CY24. We estimate that Gamuda needs to secure an additional c.RM14bn in new contracts to reach this target order book. We expect future order book replenishment to mainly come from local projects, including the Penang LRT (c.RM5bn), Upper Padas Hydro (c.RM3bn), Sabah water treatment plant, and other data center projects (c.RM3bn). We understand that Gamuda is in advanced discussions on various Australian renewable projects, including solar, wind, and hydro, and is the sole bidder for several of these projects.

Reiterate BUY with SOP-derived TP of RM9.20

We make no changes to our earnings forecast, as this contract falls under our replenishment assumption. We maintain our BUY rating and SOP-derived target price unchanged at RM9.20. Securing additional construction contracts is a key re-rating catalyst. Key risks to our BUY call include slower work progress and weaker-than-expected property sales.

Source: Phillip Capital Research - 30 Sept 2024