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Gamuda's latest job win to exceed order-book target
Gamuda's latest job win to exceed order-book target

The Star

time5 days ago

  • Business
  • The Star

Gamuda's latest job win to exceed order-book target

CIMB Research said the NPWSS project provides Gamuda with the base to rebuild its water-related recurring earnings streams. PETALING JAYA: Gamuda Bhd 's latest contract win offers recurring income and a turnkey contract role and helps its total order book exceed its target for 2025. CGS International (CGSI) Research estimates the engineering and construction group's order book for the year could stand at about RM47bil, above its in-house target of RM40bil to RM45bil, after it secured a potential RM5bil worth of water treatment and distribution infrastructure jobs in Kerian, Northern Perak, in a joint venture with Perbadanan Kemajuan Negeri Perak (PKNPk). The project is part of the broader Northern Perak Water Supply Scheme (NPWSS), which aims to transfer 1.5 million litres per day (mld) of raw water from Sungai Perak to the Bukit Merah Dam. Meanwhile, 500 mld of the supply will be allocated to address the immediate irrigation needs of Northern Perak, with the balance to be made available to meet the domestic and industrial demands of Perak. Excess treated water will be sold to Penang. Analysts think the contract win offers Gamuda not just engineering opportunities as the turnkey contractor but also recurring income over some four decades as the developer of NPWSS. CGSI Research noted a PKNPk-Gamuda JV (50:50) will undertake this project on a privatisation basis with a minimum 40-year operation period and take its year-to-date job wins to RM23.4bil. 'Gamuda estimates the pre-tax margin for the project to be around 10% to 12%, within the range of its Malaysian infrastructure projects. 'This will be positive for improvement in its construction margin trajectory, where we expect a more meaningful recovery in financial year 2026 (FY26). 'This is when its local projects (39% of order book as of June 2025) move away from the shallow part of the S-curve recognition,' the research house stated in a report on the company. It added the award could be seen as a signal that the government may look to expedite project flows. Furthermore, CGSI Research maintained its 'add' call on the stock with a sum-of-parts (SOP) derived target price (TP) of RM6 a share. RHB Research, however, believes any formal awards pertaining to the NPWSS project will likely take place next year. Hence, it has made no changes to its earnings estimates for Gamuda, as there were no changes in its order book while awaiting further details such as tariffs, project tenure and approval from the relevant authorities related to the NPWSS project. It made no changes to its 'buy' call on Gamuda nor to its SOP-derived TP of RM5.86 a share. CIMB Research said the NPWSS project provides Gamuda with the base to rebuild its water-related recurring earnings streams following the disposal of its 40% stake in Syarikat Pengeluar Air Selangor Sdn Bhd several years ago. It kept its 'buy' recommendation on Gamuda with an unchanged TP of RM5.50 a share.

Gamuda on track to exceed project wins this year
Gamuda on track to exceed project wins this year

The Star

time07-07-2025

  • Business
  • The Star

Gamuda on track to exceed project wins this year

PETALING JAYA: Gamuda Bhd , the country's largest construction player, is 'highly likely' to exceed its order-book target of RM40bil to RM45bil for 2025, according to analysts. CGS International Research (CGSI Research) said Gamuda, whose single-largest shareholder is the Employees Provident Fund, had already achieved an order book of RM37.2bil as of end-June, following its latest contract win worth RM3.72bil in Taiwan announced recently. The contract to build a wharf and connecting bridges for the Kaohsiung Port Intercontinental LNG Terminal Construction Project was secured by its joint-venture company. Given its 70% majority stake in the company, the revenue attributable to Gamuda from the five-year contract is estimated at RM2.6bil. 'We expect one more Taiwan contract win by the end of this year worth about RM3bil, which is part of the additional provisional amount for its RM3.1bil Xizhi Donghu Mass Rapid Transit turnkey construction project in Taiwan that it won last October. 'This project came with already determined additional work of eight billion New Taiwan dollars or about RM10.8bil. Gamuda's 75% share is worth RM8.1bil. 'Including the latest Taiwan order and assuming it wins the local projects it is targeting, we estimate Gamuda will end this year with an order book of RM42.2bil, factoring a burn rate of RM1bil per month. 'This does not include other potential awards in Taiwan, Australia the Penang light rail transit project and the Perak to Penang water transfer project,' the research house said. Meanwhile, MIDF Research expects about RM11bil to RM15bil of new wins for Gamuda. Of the high percentage of wins that the management guided for in a previous analyst briefing in March, about RM24bil worth of contracts remain, MIDF Research said. 'We expect the new wins to come from seven tenders submitted for data centres, a Sabah water project worth RM4bil, additional work on the Xizhi Donghu transit project, and potential contract conversion from early contractor involvement jobs for renewable energy in Australia. 'We believe there may also be a potential variation order from the Sydney Metro West tunnelling project that was halted for two months due to proximity to the foundations of an existing building.' The research house also noted that Gamuda's project pipeline for next year looks healthy, with the construction giant being shortlisted for several projects in Australia and New Zealand, such as the Parramatta Integrated Station Development, Sunshine Coast Railway in Brisbane and the 26-km Warkworth to Te Hana section of the Northland Expressway in New Zealand. With the latest contract win, the share of Taiwanese projects on Gamuda's order book jumped to RM9.9bil, or 27% of its total work, slightly behind Australia at 28%. Nevertheless, CIMB Research said Malaysia continues to be Gamuda's largest construction market, accounting for 39% of its order book. 'We make no changes to our earnings forecast, as the latest win already forms part of our new contract assumptions for this year. 'There is upside to our earnings projections if Gamuda maintains its robust contract delivery and exceeds our win assumptions of RM20bil annually for both this year and next year,' it said. Of the three research firms, CGSI Research had the highest target price of RM6 per share.

Govt targets RM5bil from SST revision
Govt targets RM5bil from SST revision

The Star

time10-06-2025

  • Business
  • The Star

Govt targets RM5bil from SST revision

Minister of Finance II Datuk Amir Hamzah Azizan PUTRAJAYA: The government expects to raise RM5bil from the revision of the sales tax and expansion of the service tax (collectively SST) to other services effective July. Finance Minister II Datuk Seri Amir Hamzah Azizan, said the revision of the SST is driven by the need to improve the fiscal space of the federal government to improve the delivery of service to the public and lower the cost of living besides increasing the amount of cash assistance to the people. 'To ensure that the majority of the people are not affected by the SST revision, the Madani government is taking a targeted approach to ensure that basic goods and services are not taxed. 'In addition, various facilities are also provided to reduce the impact on micro, small and medium enterprises,' he told a media briefing here yesterday. Hence, Putrajaya has maintained zero sales tax on essential goods like rice, chicken meat, and vegetables but introduced a 5% tax on goods such as king crab, salmon, truffle and essential oil as well as raise the sales tax to 10% for products such as racing bicycles, antique hand paintings and tungsten scrap residues from 5%. It has broadened the tax base and imposed a 8% tax on services such as rental and leasing, financial and beauty services, and a 6% tax on construction, healthcare and education services. The Chartered Tax Institute of Malaysia (CTIM) said the move to revise the SST was timely and a strategic use of indirect taxation to enhance government revenue without resorting to further direct taxes or reintroducing the goods and services tax at this juncture. 'As Malaysia's service-based economy continues to grow, CTIM recognises the government's effort to broaden the tax base by incorporating more sectors into the SST regime. 'This aligns with global trends and reflects a pragmatic approach to fiscal sustainability,' it noted in a statement. CTIM added to ensure a smooth transition, it urged the government to establish dedicated support channels – such as hotlines, emails, or live chats – manned by knowledgeable personnel to provide timely responses and minimise compliance risks. The collection of the SST from registered businesses will begin next month and for companies that now come under the tax space collection, it is expected to begin in September after such businesses have registered with the Customs department. This extension of the SST is accompanied by selected exemptions to avoid double taxation as well as ensure that certain essential services for Malaysian citizens are not taxed, Amir Hamzah added. Details are available on the Royal Malaysian Custom's department's website. Putrajaya collected about RM45bil in SST in 2024. According to the Finance Ministry's official first quarter 2025 Economic Report, the federal government's revenue for the quarter amounted to RM72.1bil, driven in part by a surge in SST receipts which totalled RM11.1bil. The reimplementation of SST in September 2018 saw the government collect RM5.4bil for the period. Annual SST collection in 2019 amounted to RM27.6bil, RM25.2bil in 2020, RM25.5bil in 2021, RM31.3bil in 2022 and RM35.4bil in 2023.

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