Overview of Gamuda Berhad

Gamuda Berhad stands as a significant player in the civil engineering construction sector, with notable exposure in property development and water concessions. As of the latest analysis, Gamuda’s market capitalization is pegged at RM27,235.9 million, reflecting its substantial presence in the market.

The company’s stock performance has shown resilience with a 52-week high of RM9.65 and low of RM4.30. This growth trajectory is underscored by its impressive price performance, showing substantial gains across various timeframes with a year-to-date increase of 114.5%.

Investment Recommendation

The analysts at UOB Kay Hian have reiterated their BUY recommendation on Gamuda, maintaining an optimistic outlook with a target price of RM11.11, representing a 15.7% upside from the current share price of RM9.60.

Financial Performance and Results

1QFY25 Results

Gamuda’s 1QFY25 results indicate a seasonally slower start, with core net profit reported at RM199.8 million, a decrease of 33.6% quarter-on-quarter but an increase of 7.3% year-on-year. Revenue stood at RM4.1 billion, marking a 12.4% decline from the previous quarter but a significant 47.5% increase year-on-year.

The performance was impacted by slower construction progress billings and the absence of lumpy revenue recognition for Vietnam’s quick turnaround projects (QTPs). However, expectations are high for a strong pickup in earnings for the remainder of FY25 as progress billings ramp up.

Segmental Analysis

Construction Segment

The construction and engineering division recorded an EBIT of RM169 million, reflecting a 41% decline quarter-on-quarter but a 23% increase year-on-year. This segment’s revenue was resilient year-on-year, driven mainly by better progress billings for overseas projects, particularly in Australia. However, slower progress billings for new projects contributed to a quarterly decline.

Property Development and Club Operations

In the property segment, Gamuda reported higher revenue of RM1.05 billion, an 87% increase year-on-year. Despite the strong revenue growth, net profit declined by 17% year-on-year to RM64 million. The property segment’s blended net margin eased due to the completion of the high-margin Celadon City project and slower building progress from newly launched QTPs.

Strategic Developments

Gamuda Technologies Division

Gamuda is making strategic moves by forming a 50:50 joint venture with DNeX Solutions to deliver Google Distributed Cloud air-gapped services. They are also acquiring a stake in Cloud Space for RM18 million. This new venture aims to leverage Gamuda’s AI Academy initiative with Google, tapping into Malaysia’s burgeoning Cloud and AI market.

Robust Construction Orderbook

Gamuda’s orderbook remains robust, standing at RM30 billion as of 1QFY25, with potential to reach RM40-45 billion by the end of 2025. The company is poised to benefit from domestic infrastructure projects and international ventures, particularly in the renewable energy sector in Australia and transportation projects in Taiwan.

Market Position and Future Outlook

KLCI Inclusion

Gamuda’s recent inclusion in the FBM KLCI is a significant milestone, expected to catalyze a potential valuation re-rating. This development underscores the company’s growing prominence in the market.

Earnings and Valuation

UOB Kay Hian has revised Gamuda’s FY26 earnings upwards by 4%, anticipating strong orderbook replenishment. The construction division is pegged to a higher PE multiple of 25x, reinforcing the company’s robust multi-year orderbook visibility.

Environmental, Social, and Governance (ESG) Initiatives

Gamuda is committed to reducing greenhouse gas emission intensity by 30% by 2025 and 45% by 2030. The company’s workforce is well-diversified, with a nearly equal gender distribution, and independent directors comprise 57% of its board, highlighting strong governance practices.