KUALA LUMPUR: Shares in Gamuda Bhd hit a new high on Wednesday after the company secured a RM4.3 billion contract for the Xizhi Donghu Mass Rapid Transit (MRT) in Taiwan.
At 9.10 am, the shares jumped more than 2.0 per cent or 30 sen, to reach RM8.84 from their previous close of RM8.54.
Gamuda Bhd has secured a RM4.3 billion contract for the Xizhi Donghu Mass Rapid Transit (MRT) in Taiwan, marking the group's seventh major infrastructure project there.
The New Taipei City Government's Department of Rapid Transit Systems awarded the project to an unincorporated joint venture between Gamuda, which holds a 75 per cent majority stake, along with two Taiwan-based companies, namely MiTAC Information Technology Corp (15 per cent) and Dong Pi Co Ltd (10 per cent).
Hong Leong Investment Bank Bhd (HLIB) expects the counter to undergo a contract upcycle in the coming months, leading up to its potential inclusion in the KLCI.
"We view the win as a substantial positive surprise given that Taiwan projects did not form part of its RM15 billion pipeline guidance (wins within the next two quarters) during its results briefing in September 2024.
"Taiwan's healthy infrastructure initiatives and speedy tender process will translate to more upside risk potential going forward," it said.
Moving forward, HLIB anticipates imminent conversion of its high certainty domestic pipeline comprising of Penang LRT (RM5 billion), Sabah hydro (RM2-3 billion), Sabah water scheme (RM3-4bn) and data centres (RM3 billion).
It said the partial conversion of these projects will allow Gamuda to easily hit the higher end of its end-of-calendar year (CY24) orderbook target of RM30-35bn. These domestic projects are critical towards lifting Gamuda's construction margins going forward.
"We maintain a buy rating with a higher target price of RM9.38 derived based on a 10 per cent discount to the SOP value of RM10.43," it added.