06-05-2025
Gamuda's Trifactor Advantage In Data Centre Play
Gamuda Bhd, a key player in the Malaysian construction sector, has received positive analyst feedback following its recent land sale and enabling works contract developments. MIDF Amanah Investment Bank Bhd (MIDF Research) and CIMB Investment Bank Bhd (CIMB Securities) both maintain a BUY call on the company, with target prices of RM5.42 and RM5.26 respectively, reflecting a strong outlook for Gamuda's ongoing and upcoming projects.
On May 2, 2025, Gamuda announced the sale of four plots of land, totalling 389 acres, to Pearl Computing Malaysia for RM455.2 million. This move is part of Gamuda's broader strategy in the data centre (DC) sector, which analysts see as a significant growth area. MIDF Research highlights the sale's alignment with Gamuda's differentiated data centre delivery strategy, which combines land, water, and power solutions for faster market entry.
This is further bolstered by the company's Digital Industrialised Building System (IBS) capabilities. The sale was part of a broader plan that also involved securing a RM1.01 billion contract for enabling works on the land, which will support the development of a major data centre hub in Port Dickson.
CIMB Securities also sees this deal positively, noting that the enabling works contract will boost Gamuda's order book by 2.8%, bringing it to RM37 billion. The contract includes earthworks, the construction of a 65 million-litre per day water treatment plant, and off-river storage facilities, with completion slated between 2025 and 2028.
CIMB suggests that this contract places Gamuda in an advantageous position to bid for future DC projects, which are expected to be a significant source of revenue for the company. They estimate the potential total value of DC construction at RM14 billion to RM20 billion over time.
Hong Leong Investment Bank Bhd (HLIB) echoes similar sentiments, maintaining its BUY recommendation with a target price of RM5.26. They emphasise that the enabling works contract will help bolster Gamuda's unbilled order book, supporting growth through its high-certainty pipeline of projects.
The HLIB team also notes that the deal is in line with their expectations and strengthens their conviction in Gamuda's position in the data centre construction market.
Analysts are particularly optimistic about Gamuda's future prospects, considering its strong order book, strategic position in the data centre sector, and ongoing expansion both locally and abroad. The company's involvement in multiple high-value projects, including the Sabah water scheme and Penang LRT, further enhances its outlook.
Despite a marginal profit expected from the land sale, analysts remain confident that the enabling works contract will pave the way for even more significant data centre opportunities in the coming years.
As of the latest update, Gamuda's share price stands at RM4.38, with analysts projecting a 20.1% capital upside, supported by a robust dividend yield of 2.2% and an expected total return of 22.3%. Gamuda continues to be seen as a leader in the construction sector, with a bright future ahead driven by its diversified portfolio and strong pipeline of projects. Related
