Secures New Data Centre Building Construction Job Worth RM451.4mn

GAMUDA has secured a new data centre construction contract valued at RM451.4mn from BCEI Malaysia Sdn Bhd (BCEI). This contract involves constructing a data centre building in Cyberjaya, covering foundation, civil, structural, and architectural works. Notably, BCEI (Burr Computer Environments Inc.) is a US-based engineering firm specialising in data centre planning and construction, with an established client base that includes numerous Fortune 500 companies.

The project is set to commence by the end of this year, with completion expected by 1QCY26.

Our Views

This contract marks the fourth new project awarded to GAMUDA in FY25, bringing its new job wins since FY24 to RM16bn. Consequently, the company’s unbilled order book has risen to approximately RM31.4bn, putting it closer to achieving its internal target of RM35bn by the end of CY24. This is also equivalent to 2.9x GAMUDA’s FY24 construction revenue.

Assuming a PBT margin of 10%, as guided by management, this data centre project is expected to generate a net profit of around RM34.3mn throughout the construction period.

Looking ahead, we expect the Penang LRT project to be finalised by the end of November 2024, which could boost GAMUDA’s order book by an estimated RM6–7bn, thereby surpassing its target order book of RM35bn. Additionally, we anticipate more data centre contracts to be awarded soon as GAMUDA continues to leverage its engineering and construction expertise.

Impacts

No changes to our earnings estimates, as the new job win falls within our FY25 new job replenishment assumption of RM20bn.

Valuation

We maintain our SOP-derived target price of RM10.98, inclusive of a 3% ESG premium based on our 4-star rating. With the potential inclusion of GAMUDA in the KLCI index, it presents a good buying opportunity given its emerging value. Maintain Buy call on the stock.

Source: TA Research - 4 Nov 2024