GAMUDA, partnering French rail transport giant Alstom, has won the signalling project for the rail network in Perth, Australia. We estimate GAMUDA’s share is worth c.AUD700m (RM2.1b), putting it one step closer to meeting its job win target of RM25b over two years. We maintain our forecasts, TP of RM6.20 and OUTPERFORM call.

GAMUDA’s Australian unit DT Infrastructure Pty Ltd (DTI), via AD Alliance, a JV with Alstom Transport Australia Pty Ltd, a unit of French rail transport giant Alstom, has won a high-capacity signalling project (upgrading of signalling and train control systems) for the rail network in Perth, Western Australia. AD Alliance was one of the two shortlisted bidders in Jun 2023. We estimate DTI’s share of works to be worth c.AUD700m (RM2.1b).

We are positive on the latest development. This is GAMUDA’s fifth major contract win in FY24, bringing its YTD contract wins to RM13.3b- RM13.8b against its job win target, which is also our assumption, of RM25b over two years In FY24 and FY25.

Out of five contract wins, only Taiwan’s Kaohsiung MRT Yellow Line (worth RM3.03b) and Singapore’s MRT West Coast Station and Tunnels (worth RM1.77b) are confirmed with contract value, while the civil work contracts for Upper Padas Hydroelectric Power Plant (estimated at RM2b), Penang LRT Mutiara Line (estimated at RM4.6b- RM5.0b) and HCS project are still under negotiation.

Forecasts. Maintained.

Valuations. We maintain our SoP-based TP of RM6.20 (see Page 2) that values its construction business at 18x FY25F PER and includes a 5% premium given its 4-star ESG rating as appraised by us (see Pages 5).

Investment case. We continue to like GAMUDA for: (i) being the front- runner for the tunnelling job for the MRT3, (ii) its ability to secure new jobs in overseas markets, (iii) its strong war chest after the disposal of its toll highways, (iv) its strong earnings visibility underpinned by a record outstanding order book of RM24.1b (excluding Upper Padas Hydro, Penang LRT and HCS projects), and (v) its inroads into the renewable energy space. Maintain OUTPERFORM.

Risks to our call include: (i) delays in the roll-out of key public infrastructure projects in Malaysia such as the MRT3, (ii) rising input costs and labour shortage, (iii) risks associated with operations in overseas markets such as change in government policies towards foreign businesses and forex, and (iv) liquidated ascertained damages (LAD) from cost overrun and delays.

Source: Kenanga Research - 8 Apr 2024