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.
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