Gamuda shares rise in early trade after securing Perak water project
At 10.15 am, the counter gained six sen to RM5.09, with a total of 1.82 million shares traded.
Gamuda via its 50 per cent-owned Gamuda-Perak State Development Corporation (PKNP) joint venture (JV) has secured the letter of appointment from the Perak state government to jointly develop and operate water treatment and distribution infrastructure in Kerian, Perak.
This forms part of the broader Northern Perak Water Supply Scheme, which carries an estimated development cost of RM5 billion.
In a research note today, Hong Leong Investment Bank Bhd (HLIB) anticipated that Gamuda's total investment in the JV could come to approximately RM500 million over the next few years.
'Based on an estimated total development cost of RM5 billion, we are estimating a potential construction contract value of RM4 billion to be converted in the calendar year 2026.
'Upon completion, this water project would serve as Gamuda's second recurring income source domestically, to be complemented by the Ulu Padas hydro project in Sabah,' it said.
HLIB maintained a 'buy' call on Gamuda with a target price (TP) of RM5.70 per share.
Meanwhile, Public Investment Bank Bhd viewed the JV development positively as Gamuda stands to benefit from two income streams, construction revenue and recurring income upon the project's commercialisation.
'However, we keep our forecasts unchanged, pending necessary approvals and finalisation of the privatisation agreement.
'Therefore, we maintain an 'outperform' call on Gamuda with an unchanged TP of RM5.60 per share,' said the investment bank in a separate note today.
Furthermore, CGS International Securities Malaysia Sdn Bhd said that while Gamuda maintains its order book target of RM40 billion to RM45 billion by the end of 2025, there is a chance that it may exceed the target.
It said that achieving the award by the end of 2025 would bring its year-to-date wins to RM23.4 billion.
Thus, the company estimates that it will end 2025 with a cumulative order book of RM47 billion, factoring in a burn rate of RM1 billion per month and the more visible local wins.
'From a broader local construction sector perspective, we also view this award as a signal that the government may look to expedite project flows.
'The key events to watch are the 13th Malaysia Plan to be tabled end of July 2025 and the Budget in October 2025,' it said in a note separately.
Hence, CGS International reiterated its 'add' call with a TP of RM6.00 per share for Gamuda. — BERNAMA
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