• Gamuda Berhad (Gamuda) exhibits a superior performance in FY23 driven by significant revenue contribution from overseas projects which made up 84% of construction segment revenue.

• We expect growth momentum to sustain as it is eyeing on local infrastructure projects including the MRT3 and LRT projects in Penang to achieve its orderbook replenishment target of RM25bn.

• We maintain a BUY call on Gamuda with a TP of RM5.16. Our BUY recommendation is premised on its strong construction orderbook and promising QTPs prospect.

Overseas Projects Bolstered Record-Breaking Performance

In FY23, Gamuda delivered an impressive performance underpinned by record-breaking performances in both the construction and property segments. The construction segment achieved the highest annual revenue of RM6.2bn mainly driven by the surge in revenue from overseas projects which made up 84% of the segment’s revenue. This had more than offset a relatively flat performance domestically. Similarly, the property segment achieved record sales revenue of RM2.8bn, driven by strong sales in its Quick Turnaround Projects (QTP).

Revitalising Home Ground

We are upbeat on Gamuda driven by its initiatives to achieve RM25bn orderbook replenishment for FY24-25F. Gamuda is progressing well in this regard, having secured 2 large projects with a total value of RM5.2bn including (i) the Kaohsiung Mass Rapid Transit Metropolitan Line Package YC01, and (ii) Singapore West Coast station and tunnels for New Cross Island Line. Locally, the company is poised to secure the Upper Padas hydroelectric plant project in Sabah, which currently pending finalisation of the Power Purchase Agreement (PPA). Besides that, it is also bidding for the MRT3 (tender is extended until March 2024) and Penang LRT projects. We are of the view that Gamuda is wellpositioned to secure these projects due to its competitive bid and the availability of deployable assets.

Maintain a BUY call with TP of RM5.16

We reiterate our BUY recommendation on Gamuda with SOP-derived TP of RM5.16. Our positive view on the stock remains unwavering, underpinned by: 1) robust earnings outlook supported by the company's substantial outstanding orderbook of RM25.8bn and unbilled property sales of RM6.7bn, 2) Gamuda’s prominent position as the leading contender for projects like MRT3 and Penang LRT, and 3) its strong international presence

Downside risks

Key risks include potential setbacks in contract awards and slowerthan-expected take-up rate for property segment.

Source: BIMB Securities Research - 17 Jan 2024