
Gamuda strengthens position in DC landscape
PETALING JAYA: Gamuda Bhd is well poised to strengthen its position as a one-stop data centre (DC) infrastructure provider in Malaysia, say analysts.
The group has announced the disposal of a 389.7-acre freehold land in Negri Sembilan to Pearl Computing Sdn Bhd (PCSB) for RM455.2mil in cash.
Simultaneously, its subsidiary, Gamuda DC Infrastructure Sdn Bhd, has secured a external infrastructure contract worth RM1bil from PCSB.
TA Research has viewed the latest developments as exemplifying Gamuda's strength in offering end-to-end 'land+utility+water' packages for DC-related projects.
'With the disposal expected to conclude by end-2025, we estimate a modest gain of RM30.8mil, before accounting for holding and ancillary costs.
'The RM1bil enabling works contract could also boost Gamuda's year to date job wins to RM26.2bil since financial year 2024 (FY24), raising its total outstanding order book to about RM37bil – equivalent to 3.5 times FY24 construction revenue,' said the research house.
Based on Gamuda's management guided pre-tax profit margin of around 8%, TA Research noted the contract is anticipated to contribute RM60.8mil in net profit over the construction period.
It remained upbeat on Gamuda's DC job prospects given its management which expressed high confidence in securing at least three new projects from two local developers by year-end.
Including other imminent contract win namely the Australian Suburban Rail Loop, Sabah Upper Padas water treatment plant, and additional Taiwan Xizhi Donghu MRT packages totalling RM17bil, TA Research believed the management's internal goal of achieving an unbilled order book of RM40bil to RM45bil is within reach. It has maintained a 'buy' call on the stock with a target price (TP) of RM5.88 per share.
Kenanga Research, in a note to clients, also saw potential for Gamuda to secure significant DC projects. It noted the 389-acre land has the capacity to support DC developments of 800MW to 1,000MW.
With estimated construction costs of RM18mil to RM20mil per MW, the total potential contract value for this development could be RM14bil to RM20bil, said Kenanga Research.
Assuming Gamuda secured half of the contracts over a two-year period, the annual data centre job wins could be RM3.5bil to RM5bil.
'This will surpass our current annual assumption of RM3bil. For every additional RM1bil in DC contracts secured beyond our RM3bil assumption, we estimate a 2.2% increase in FY26 earnings forecast and a seven sen rise in the TP from RM4.90,' added the research house.
CGS International Research (CGSI Research) highlighted Gamuda's targeted order book of RM40bil to RM45bil by end of 2025.
'If all of the projects come to fruition and assuming a burn rate of RM1bil per month, Gamuda may end up with an order book of RM59bil by end-2025. Our FY25 and FY26 new order win assumptions are more conservative at RM8bil and RM20bil respectively,' it added.
CGSI Research, which liked Gamuda for its diversified order book and growing property business, had reiterated an 'add' call on stock with a TP of RM6.
MIDF Research described Gamuda's freehold land sale and the award of a RM1bil enabling works contract as a positive development, which is in line with the group's latest strategy of a differentiated DC delivery.
'Gamuda remains our favourite in the construction sector, backed by its successful overseas expansion plan, consistency in clinching sizeable jobs and being a front runner for most mega projects in Malaysia,' it added, reiterating a 'buy' call on Gamuda with a TP of RM5.42. The counter closed three sen down to RM4.35 yesterday.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Star
4 hours ago
- The Star
Roundup: African experts spot potential of Juncao technology to boost livelihoods, sustainable agriculture
KIGALI, July 24 (Xinhua) -- African agricultural experts are looking to harness Juncao technology, a Chinese innovation used in mushroom cultivation and livestock feed, to improve livelihoods and increase incomes in rural communities across the continent. "Juncao technology offers far more than mushroom cultivation; it is a comprehensive innovation having crop, livestock production, environmental protection, livelihood nutrition and economic empowerment," said Telesphore Ndabamenye, director general of the Rwanda Agriculture and Animal Resources Development Board. He made the remark while attending the closing ceremony of a Juncao technology workshop held on Wednesday in Kigali, the capital of Rwanda. Stressing the importance of Juncao technology in advancing agricultural transformation, Ndabamenye said the participation of trainees from diverse economies highlighted the broad applicability of the technology, particularly in addressing the socioeconomic challenges faced by smallholder farmers. "Juncao technology is regarded in Rwanda as a vital contributor to the country's inclusive agriculture transformation. It supports our national vision of a professionalized and commercialized farming sector with active participation of both men and women as stated under Rwanda's vision 2050," he said. He reaffirmed Rwanda's commitment to integrating Juncao technology into the country's strategy for food and nutrition security, environmental sustainability, and economic development, in full alignment with continental and global development agendas. Since Juncao was first introduced to Rwanda in 2006, more than 35,000 local farmers have received training, and over 4,000 households, along with 50 companies and cooperatives, have been supported in engaging in Juncao-related activities. The July 16-23 Juncao workshop was held at the China-Rwanda Agriculture Technology Demonstration Center, co-hosted by the United Nations Department of Economic and Social Affairs, the Rwandan Ministry of Agriculture and Animal Resources, and China's Fujian Agriculture and Forestry University. As part of the training, participants visited several projects in Huye and Nyanza, gained hands-on experience, and deepened their understanding of Juncao technology's potential. Innocent Shayamano, chief agriculture extension specialist and project coordinator from Zimbabwe's Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, said the workshop covered critical areas such as cultivation management of Juncao grass, including all its agronomic aspects. "This course was relevant and significant for our country. We have seen the opportunities in embracing Juncao technology in terms of using Juncao grass as a substitute for livestock feed. This technology came to transform livelihoods and ensure that rural communities have enough income," he said. Chinese Juncao expert Lin Hui said the participants' active engagement, thoughtful questions, and enthusiasm for applying the acquired knowledge were truly inspiring. According to Lin, Fujian Agriculture and Forestry University of China has organized 388 training courses over the years, benefiting more than 16,000 people worldwide. According to Li Jiahui, a representative of the Chinese Embassy in Rwanda, the technology has benefited over 100 countries since 2001, helping families lift themselves out of poverty and achieve prosperity. "It has been proven that Juncao is not merely a technology but a grass of wealth and a grass of happiness. China takes great pride in sharing the technology as part of its commitment to South-South cooperation," Li added.


The Star
a day ago
- The Star
Alliance poised to ramp up customer acquisition
Kenanga Research noted that the group presented a FY26 loans growth guidance of 8% to 10%. PETALING JAYA: Analysts have maintained their outperform call with a lower target price of RM4.85 for Alliance Bank Malaysia Bhd (ABMB), following its recently completed rights issue exercise. Kenanga Research told clients in a report it believes that the proceeds from the exercise would enable the group to ramp up its customer acquisition efforts. It has cut its financial year ending March 31, 2026 (FY26) earnings by 8%, reflecting lower net interest margins from the recent 25 basis points (bps) overnight policy rate cut and aligned its credit cost assumptions to 35 bps from 31, being the upper range of guidance. Citing a recent meeting with the lender, Kenanga Research noted that the group presented a FY26 loans growth guidance of 8% to 10% which is below the 12% achieved in FY25. The research firm said its model assumptions are conservatively kept at around 8% in line with the lower band of guidance. The group's recently completed rights issue generated cash proceeds of RM600mil in capital to fuel its growth strategies. 'We gather that ABMB is likely deploying across all markets as opposed to accelerating its position in a specific market. 'Amid macro-economic challenges, we opine the bank may benefit from a larger collateralised portfolio (mortgage) as delinquency risks may emerge from its commercial segment, namely from small medium enterprises which are 34% of its loan book.'

Barnama
2 days ago
- Barnama
US Tariffs Could Drag ASEAN-5 GDP Growth To 1.5 Pct In 2026 -- Economist
US Tariffs Could Drag ASEAN-5 GDP Growth To 1.5 Pct In 2026 -- Economist KUALA LUMPUR, July 17 (Bernama) -- ASEAN-5 gross domestic product (GDP) growth is projected to fall to just three per cent in 2025 and as low as 1.5 per cent in 2026 if knock-on effects from the United States (US) tariffs continue, said Bloomberg Southeast Asia economist Dr Tamara Mast Henderson. This compares with the 4.5 per cent growth figures in 2024, Henderson said, adding that the knock-on effects include reduced investment flows, weakening exports and declining business confidence. ASEAN-5 economies are Indonesia, Malaysia, the Philippines, Singapore and Thailand. "More of the disruptive effects will be coming from investments in 2025, less so from exports," she said, as cited by CIMB Securities Sdn Bhd in a note on Wednesday. Henderson also noted that foreign direct investment (FDI) would face increased competition in the region, as the US ramps up efforts to bring manufacturing and production back onshore, with investor flows expected to be increasingly diverted away from Southeast Asia. "This re-shoring push will likely 'suck up' capital that would otherwise have gone to developing Asian markets, creating tough competition for remaining FDI," she said. She is concerned that Malaysia will be in a precarious position, with 7.5 per cent of its GDP derived from exports to the US, and overall exports representing more than two-thirds of its economy. "The country faces a 25 per cent tariff, and owing to its close ties with China — including several memoranda of understanding (MoUs) and its participation in BRICS-related initiatives — these tariffs are unlikely to be lowered," she opined. Other than trade shocks, Malaysia's crude oil production has been slowing over the years. This is an added negative to the softening oil prices, which will dent government revenues and scope to support the domestic economy. "Malaysia's key export sector, electrical equipment, is particularly vulnerable," she said. Henderson projects Malaysia's GDP growth to fall below four per cent in 2025, with even weaker GDP growth possible in 2026 should tariffs remain in place. As for the US, she said the world's largest economy is also expected to suffer economically, as the higher tariff regime will increase input costs, reduce domestic demand, and lead to slower GDP growth. "Additionally, it will limit the Federal Reserve's ability to cut interest rates in the short term, creating a difficult macro policy environment," she said. -- BERNAMA