We maintain BUY on Gamuda. The group has secured Package 1 of the Penang LRT Mutiara line project for RM8.3bil. We maintain our forecasts for now, as the win is well-baked into our orderbook replenishment assumption for the fiscal year of RM25bil. Moving forward, we look towards the third package, the Systems Turnkey Contract (STC), which we believe is worth up to RM1.2bil. Hence, we maintain our RNAV-based target price (TP) at RM5.70/share which implies a CY26 PER of 22x or >+2SD to its 10-year average of 12x.

• First win for 2025. The Group announced that it has secured Package 1 of the Penang LRT Mutiara Line project for a contract sum of RM8.3bil via its 60% subsidiary, SRS Consortium. The project will involve civil construction and structural works of a 23.7km elevated viaduct, 19 stations, a depot and other associated works from Penang South Reclamation Island A to Komtar. Contract duration is 72 months (or approximately 6 years), with work expected to begin by 2Q 2025 at the earliest.
• Maintain forecasts for now. The contract win translates to an effective value of RM5bil for Gamuda. We believe the project will deliver a commendable PBT margin of 8%. We maintain our forecasts for now as it is well within our orderbook replenishment assumption of RM25bil for FY25. With this, the Group's FY-to-date wins are now up to RM13.8bil, bringing its orderbook to RM37bil (+49% vs. end-FY24).
• Onto Package 3 - potential win by 3Q 2025? Though we are positive over the development, the win was largely expected by investors. We believe focus will now shift towards delivery of Package 3 - the Systems Turnkey Contract worth up to RM1.2bil whose submission is due by 14 April. We gather from management that it is keen to participate in the tender, though no further information has been shared. We are optimistic over its prospects given Gamuda's track record of successful delivery of similar projects. Despite the extended negotiation period for Package 1 (>6 months), we are hopeful over delivery by 2025 as the Penang State Transport and Infrastructure Committee has highlighted that the other segments may need to take place concurrently for smoother implementation.

Source: AmInvest Research - 14 Jan 2025