• Gamuda secured a AUD243mn (RM702mn) construction contract to deliver the Boulder Creek Wind Farm in Queensland, Australia.

• The new win adds to its construction orderbook which now stands at RM25.5bn, providing robust earnings visibility up to FY28F.

• This marks Gamuda entrance in Australia renewable landscape, and being the first project run by the company under DTI.

• We have a BUY recommendation on Gamuda with SOP-derived TP of RM9.50, implies a 23x PER on FY25F EPS.

Gamuda Makes Green Strides

In a recent announcement, Gamuda, via its Australian subsidiary DT Infrastructure (DTI), has secured a significant RM702mn contract to deliver construction works for the Boulder Creek Wind Farm project in Queensland. This venture not only strengthens Gamuda's presence in Australia but also marks its debut in the country's renewable energy sector. The scope of work involves civil and electrical balance of plant (BoP) tasks, including the construction of 41km of access tracks with challenging grades of up to 15%, and managing nearly 700,000m³ of bulk earthworks. The 32.5-month construction period is slated to commence at the end of this year, with financial contributions anticipated to be reflected in Gamuda’s FY25 earnings.

Renewable Project Fuels 1HFY25 Replenishment Plans

The new win represents Gamuda's first project to be directly executed through DTI. This move establishes Gamuda’s entry into the renewable energy sector, providing a foundation to gradually replace toll revenues as its renewable portfolio scales up. Thus, we maintain our positive outlook on Gamuda, as this new win enhances the company’s standing in the clean energy sector while diversifying its portfolio, positioning it well to achieve its projected RM30bn orderbook. With an anticipated RM15bn replenishment in 1HFY25, this first renewable energy win for FY25 signals accelerated progress toward the target, in which we expect influx of projects will include significant contributions from data center ventures. Looking ahead, we expect that the transition in its construction segment will lead to an improvement in margins from domestic infrastructure projects, particularly with the Penang LRT and Upper Padas Hydro project. While overseas projects still dominate, the growing focus on local projects presents an opportunity for enhanced domestic margins, contrasting with the current FY24 structure, where 62% of projects are from overseas.

Source: BIMB Securities Research - 30 Sept 2024