Gamuda has clinched a NTD31.9bn (approx. RM4.3bn) project with its Taiwanese partners, MiTac Information Technology Corp (MiTAC) and Dong Pi Co Ltd (DongPi) from the New Taipei City Government. The joint venture (JV) between Gamuda (75%), MiTAC (15%) and DongPi (10%) was awarded turnkey design-and-build contract for the XiZhi Donghu Mass Rapid Transit (MRT). Based on the Gamuda’s stake in the JV, the contract value attributable to Gamuda is RM3.9bn. With this new contract, the Group’ outstanding orderbook is now estimated at RM28.7bn. Though positive about this contract win, we are keeping our forecasts unchanged as this is within our FY25 orderbook replenishment assumption of RM16bn. This win underscores the Group’s strength in securing big projects in competitive international markets. We retain our Outperform rating on Gamuda, with unchanged SOTP-based TP of RM9.20.

• Project details. The new job involves the design and construction of a 5.78km railway track comprising of six elevated stations within Taipei Neihu District and New Taipei City XiZhi District. The project is part of a substantial infrastructure initiative currently underway in New Taipei City, Taiwan, with the primary goal of expanding and improving connectivity between Xizhi District and other parts of New Taipei and Taipei City.

• Scope of works for this project include the design and construction of 5.78km of elevated viaducts and track work, six elevated stations and system works such as rolling stock, power supply, signaling, platform screen door, communication system, central monitoring system, auto fare collection system and depot maintenance equipment. The work is expected to commence in 2QFY25 and will be completed in 1QFY32 (7 years).

• Healthy orderbook at RM28.7bn. The Group’s unbilled order book has increased by 12.5% to approximately RM28.7bn. Assuming a pre-tax profit margin of 8% and a corporate tax rate of 20% in Taiwan, this project is expected to contribute about 2.1% to net profit annually, based on certain levels of work completion each year over the project’s 7-year duration. However, we make no adjustments to our earnings estimates, as this is already factored into our RM16bn order book replenishment assumption for FY25.

• Strong pipeline. The JV is also obligated to undertake, upon instruction from the New Taipei City government, pre-determined works valued at RM10.8bn, comprising the XiZhi Donghu Line Maintenance Depot and system and track works for two extension lines—the Keelung Line MRT and the Minsheng Line MRT. This is expected to be awarded before the end of the XiZhi Donghu MRT contract.

Source: PublicInvest Research - 23 Oct 2024