• Gamuda via 60%-owned SRS Consortium announced RM5bn Penang LRT contract. It is also eyeing for the system package expected to award in 2HCY25

• YTD contract wins at RM13.8bn, bringing latest orderbook value to c.RM37bn

• Maintain BUY rating and SOP-derived target price of RM5.55

Announced Penang LRT win

Gamuda, via 60%-owned SRS Consortium, announced an RM8bn Penang LRT contract win from MRT Corp. The federal government now funds the project instead of a Project Delivery Partner arrangement. The project scope will cover the design and construction of a 23.7km elevated viaduct, with 19 elevated stations and a provisional station along the alignment from Komtar to Silicon Island A. Gamuda’s 60% effective stake in the project implies a contract value of RM5bn over the 6-year construction period.

On track to achieve RM40-45bn order book target

The project is expected to fetch an 8% profit before tax margin, focusing on elevated construction work, lower than the usual 12% margin for local rail infrastructure projects with underground works. We estimate this contract will contribute RM400m PBT over the construction period. Two other packages are up for grabs: the Macallum to Penang Sentral civil work contract and the turnkey package for the system works, collectively with an estimated value of up to RM5bn; Gamuda is looking to bid for both. Nevertheless, the civil works package for the alignment from Macallum to Penang Sentral is still in the planning phase, with the design expected to be finalised by Jul26. Gamuda’s YTD new contract wins amount to RM13.8bn, representing 76% of our RM18bn order replenishment assumption for FY25E. This brings the latest order book to RM37bn, and on track to achieve Gamuda’s order book target of RM40bn-45bn by end CY25.

Reiterate BUY with TP of RM5.55

We make no changes to our earnings forecast as this contract falls under our order book replenishment assumptions. We continue to like Gamuda for its proven track record in executing infrastructure projects and increasing data centre exposure. We maintain our BUY rating and SOP-derived target price unchanged at RM5.55. Key risks to our BUY call include a delay in work progress, slower contract awards, weaker-than-expected property sales, and project cost overruns.

Source: Philip Capital Research - 14 Jan 2025