The research house noted that the new project has raised the company’s outstanding order book to a new high of RM15.28 billion, which is heavily weighted towards overseas projects.
It said this would provide Gamuda with strong earnings visibility up to the 2026 financial year.
Gamuda, a tunelling and rail expert, announced yesterday that it had been appointed the main contractor for the project by the railway bureau of the Taiwan ministry of transportation and communications.
The project will be a 60:40 joint venture comprising Gamuda and Asia World Engineering & Construction Co (Awec).
The project entails the realignment of an underground railway line and construction of the Pingzhen commuter station under a Taoyuan city and Taiwanese government strategic infrastructure plan.
The contract, which is slated to be completed in eight years, is expected to bring in NT$8.7 billion (RM1.28 billion) in revenue.
“Assuming a rather conservative margin of 6%, the project is expected to deliver net earnings of RM76.8 million or RM9.6 million annually until financial year 2031 (FY2031),” said MIDF Research.
The research house noted that most of Gamuda’s projects still comprise jobs in Australia, totalling RM8.2 billion, or 53.7% of its order book. The new job win in Taiwan lifts its outstanding jobs in Taiwan to RM2.28 billion.
“The other components of its order book are RM3.3 billion jobs in Malaysia and RM1.5 billion in Singapore. This is in line with management’s aim of making Gamuda a regional player,” it said.
MIDF Research also noted the restructuring of Gamuda’s four major highway concessions comprising Kesas, Sprint, Litrak and Smart was completed on Oct 13, 2022, which saw all four entities fully acquired by Amanat Lebuhraya Rakyat (ALR), marking Gamuda’s exit from the toll concession business.
“This also means that the much-awaited special dividend will soon be issued, which we expect to be in December. We expect Gamuda to announce its special dividend of 38 sen per share towards the end of November, equivalent to about RM1 billion of its RM2.33 billion proceeds,” it said.
Meanwhile, PublicInvest Research said that besides the new contract win, its property arm Gamuda Land has signed a memorandum of understanding with Tenaga Nasional Bhd to develop two electron stations within its townships — Gamuda Cove and Gamuda Gardens — to pave the way towards a sustainable lifestyle.
“We like the fact that the group constantly delivers and makes an effort to reduce its carbon footprint while stepping up on its environmental, social and governance-related commitments,” it said.
All factors considered, MIDF Research has maintained its “buy” call with an unchanged target price (TP) of RM4.71 for Gamuda, while PublicInvest reiterated its “outperform” rating with an unchanged TP of RM4.30.