6 days ago
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.
