Gamuda shares rise 3% on data centre contracts

KUALA LUMPUR: Shares in Gamuda Bhd made a strong start on Monday as they rose over 3% on the announcement the group had secured contracts worth a combined RM1.74bil related to a data centre project in Elmina Business Park in Selangor.

The announcement, which came after trading hours last Friday, shored up buying support for shares in the construction group, which opened at RM6.18 a share, or 2.15% above the reference price, before ramping up to as high as RM6.24 a share, representing a 3.1% increase.

As at 10.17am, more than four million Gamuda shares had changed hands.

The first contract, which was secured by the group’s wholly-owned unit Gamuda Engineering Sdn Bhd from Sime Darby Property Bhd, entails the construction of a data centre at the Elmina Business Park.

The job is scheduled to begin in May 2024 with a target completion date of February 2026.

The construction package, which carried a contract sum of RM815mil, was the highest bid among those submitted, according to Sime Darby Property.

Meanwhile, the second package, which comprised the mechanical, electrical and plumbing (MEP) fit-out works for the same project, was awarded by Pearl Computing Malaysia Sdn Bhd to Gamuda Engineering for a contract sum of RM928.6mil.

Works for this package will commence on July 1, 2025, and is expected to be completed by Sept 9, 2026.

Kenanga Research said it is positive over the contract win – Gamuda’s sixth in FY24, which brings its year-to-date wins to RM15.1bil to RM16bil – as it puts Gamuda on track to surpassing its job win target of RM25bil over two years in FY24-25.

“We raise our FY25 net profit forecast by 6%, having lifted our FY24-25 combined job win assumption to RM27bil,” said the research firm.

Correspondingly, Kenanga maintained “outperform” on Gamuda and upgraded its target price to RM6.70 from RM6.20 previously.

MIDF Research, which also has a “buy” call on Gamuda, agrees there is a strong chance Gamuda could surpass its RM25bil replenishment target.

It maintained its earnings forecast as the new wins were within its replenishment expectations. However, it revised higher its target price to RM6.83 from RM5.98 as it pegged the group FY24 earnings per share to a price-earnings ratio (PER) of 16x.

RHB Research, meanwhile, raised its target price on Gamuda to RM7.08 from RM6.55 previously as it reviewed its target PER for the Malaysian construction arm to 17x from 15x.

“The higher target price-earnings reflects the premium linked to the data centres that were not present back in 2017 and the group’s IBS factories, which may facilitate the hyperscale data centre’s smoother construction in Elmina,” it said.