Gamuda to record modest profit from Springhill land disposal
KUALA LUMPUR: Gamuda Bhd is projected to record a modest gain of under RM30 million from the RM455.2 million disposal of land in Springhill Industrial Park, Negeri Sembilan, according to Hong Leong Investment Bank Bhd (HLIB Research).
The gain represents less than 3 per cent of Gamuda's core profit after tax and minority interest (PATAMI) of RM912 million for the financial year 2024.
Despite the relatively small profit, the transaction—which reflects a 7 per cent premium over the land's purchase price in December 2024—is seen as an attractive deal for buyer Pearl Computing, considering recent data centre land transactions ranging from RM75 to RM145 per square foot.
HLIB Research said the land deal comes with a major upside since Gamuda has secured an enabling works contract valued at RM1 billion as part of the arrangement, increasing its unbilled orderbook by 2.8 per cent to RM37 billion.
The contract, which carries a typical pre-tax profit margin of around 8.0 per cent, involves multiple scopes of work with staggered completion dates: earthworks by Q3 2025, a 65-million-litre-per-day water treatment plant (WTP) by Q2 2027 and an onsite reservoir system (ORS) by Q4 2028.
This project is a key component of Gamuda's RM35 billion pipeline of high-certainty contracts expected between February and December 2025.
"We think Gamuda's differentiated DC strategy is working well, positioning it as both the critical enabling works contractor as well as land acquisition facilitator for the one gigawatt DC campus.
"The company is in a strong position to undertake future DC jobs, which we had earlier estimated at RM14-20 billion at full build-out - a substantial long term stream of DC contracts.
"Given that the earthworks scope is targeted for completion in Q3 2025, DC contracts look on track for this year," HLIB Research said.
The firm kept its "buy" call on Gamuda with an unchanged target price of RM5.26 a share.
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