Gamuda on track to exceed project wins this year
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.
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