PETALING JAYA: Gamuda Bhd’s recent joint venture (JV) to develop up to 1.2GW of solar and storage projects could deliver around RM550mil of equity value to the group.
This translates into RM50mil to RM60mil of annual pre-tax recurring income from financial year 2029 (FY29) onwards.
BIMB Securities Research treats this as a longer-term upside and the equity uplift of RM550mil equates to approximately 9.5 sen per share.
As the sole engineering, procurement and construction contractor, Gamuda is expected to capture RM340mil to RM480mil in pre-tax profit from the RM4.2bil to RM4.8bil construction scope, equivalent to 26% to 36% of FY25 pre-tax income, to be recognised across FY26 to FY27.
The research house lifted its target price (TP) to RM6.73 a share from RM6.05 a share by expanding the construction segment valuation multiple to 26 times FY26 earnings.
This reflects the confluence of record order book strength, the 13th Malaysia Plan infrastructure pipeline and the structural pivot into recurring income assets.
Hong Leong Investment Bank (HLIB) Research lifted its FY27 core profit before tax and minority interest by 6.3%. It maintained its “buy” call with a higher TP of RM6.88 a share.
RHB Research retained its TP of RM6.52 a share and maintained its “buy” call.
The annual earnings from 1.2GW of solar projects could range from RM200mil to RM250mil (for a 100% stake), depending on the tariff and this is based on its preliminary analysis, RHB Research said.
Kenanga Research maintained its “outperform” call with an unchanged TP of RM6.10 a share while MBSB Research revised its TP to RM6.35 from RM5.42 a share and retained its “buy” call.
Kenanga Research cited risks to its call that include delays in the rollout of key public infrastructure projects in Malaysia such as the mass rapid transit three, which may delay margin recovery.
It said rising input costs and labour shortage, risks associated with operations in overseas markets such as changes in government policies towards foreign businesses and forex, and liquidated ascertained damages from cost overruns and delays.
HLIB Research said it likes the stock on the back of its growing presence in the Australian renewable energy space and plenty of positive surprise potential from the data centre space.
Gamuda entered a strategic partnership with SD Guthrie Bhd to jointly develop up to 1.2GW of solar and storage projects in Malaysia under the Corporate Renewable Energy Supply Scheme.
MBSB Research said this win marks Gamuda’s fourth upcoming recurring income project. It has a 45% stake in the Ulu Padas Hydroelectric Dam that it is currently constructing in Sabah, upcoming investments for the Weasel Solar Farm and Cellars Hill Wind Farm in Tasmania and a 50% stake in the JV with the Perak government to develop and operate a water treatment and distribution infrastructure.
All these projects are expected to fully contribute to its earnings by 2030/2031.
