KEY INVESTMENT HIGHLIGHTS

• Awarded RM451.4m data centre project in Cyberjaya
• Project to start in 4QCY24 and expected completion in 4QCY26; PBT margin 10% to 15%
• Outstanding order book now stands at RM31.4b
• Maintain BUY with an unchanged TP of RM9.64

RM451m DC job. Gamuda is on a winning streak, winning its third project in two weeks. Its wholly owned subsidiary was awarded a RM451.4m foundation, civil, structural and architectural (FCSA) works contract for one data centre block in Cyberjaya.

Details of the project. The project was awarded by BECI Malaysia Sdn Bhd, an engineering firm specialising in the planning, design and construction of IT facilities for numerous Fortune 500 companies. The project begins in 4QCY24 and is expected to be completed in 4QCY26. The PBT margin expected from the project is from 10% to 15%.

On track to RM35b order book by end 2024. Gamuda's outstanding order book now rises to RM31.4b. Data centre projects currently make up about 7.8% of the group's order book. The group will potentially exceed its RM35b order book target by the year end, which we expect will come from the Penang LRT contract (RM4.56b based on Gamuda's 60% in SRS Consortium. Earnings estimates. We maintain our earnings projections as the new win is within our estimates. Target price. We maintain our TP at RM9.64, derived by pegging Gamuda's FY26F EPS of 52.1 sen to a PER of 18.5x, based on +1SD above its four-year mean from FY15 to FY18 during the previous construction upcycle. Maintain BUY. We are positive on Gamuda's latest data centre win, which brings the group closer to a new high of RM35b order book target by the year end. The group remains our favourite for the construction sector, backed by its successful overseas expansion plan; its consistency in clinching sizeable jobs and it being a front runner for most mega projects in Malaysia. Being a premium builder of data centres, the group now focusses only on hyperscale data centres, underpinning sizeable order book replenishments. All in, we are maintaining our BUY recommendation on Gamuda.

Source: MIDF Research - 4 Nov 2024