KUALA LUMPUR: Gamuda Bhd's latest contract win for a Taiwan rail project worth RM4.3 billion underscores the group's strength in securing big projects in competitive international markets, analysts said.
It is a joint venture (JV) between Gamuda and its Taiwanese partners, MiTac Information Technology Corp. (MiTAC) and Dong Pi Co. Ltd. (DongPi), from the New Taipei City Government.
Based on Gamuda's stake in the JV (75 per cent), the contract value attributable to Gamuda is RM3.9 billion.
"With this new contract, the group's outstanding orderbook is now estimated at RM28.7 billion. Though positive about this contract win, we are keeping our forecasts unchanged as this is within our financial year 2025 (FY25) orderbook replenishment assumption of RM16 billion," Public Investment Bank Bhd said in a note.
The firm retained its "Outperform" call on the stock with an unchanged target price (TP) of RM9.20.
It said the group's unbilled order book has increased by 12.5 per cent to approximately RM28.7 billion. Assuming a pre-tax profit margin of 8.0 per cent and a corporate tax rate of 20 per cent in Taiwan, this project is expected to contribute about 2.1 per cent to net profit annually, based on certain levels of work completion each year over the project's seven-year duration.
In a separate note, RHB Investment Bank Bhd kept its "buy" call on Gamuda with a TP of RM9.79 following the contract win.
It made no changes to its earnings estimates as the latest job win is within the firm's FY25 job replenishment assumption of RM20 billion.
"We reaffirm our view that Gamuda remains undervalued, trading at 19.9 times FY25F price-to-earnings (P/E) (versus less than 20 times for its peers)—not too far from the 16 times P/E seen during the 2017 upcycle when outstanding orderbook was just RM7.4 billion vs. RM29 billion post-new job win.
"Rerating catalysts include more frequent wins of new data centre jobs in Malaysia. A key risk is slower-than-expected job replenishment trends," it said.