GAMUDA: Strategic Water Project MOU Reinforces Positive Outlook
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company has taken a significant step towards securing future revenue streams by entering into a non-binding Memorandum of Understanding (MOU) with Perbadanan Kemajuan Negeri Perak (PKNPK) and Perbadanan Bekalan Air Pulau Pinang (PBAPP). This strategic collaboration aims to explore the supply and sale of treated water from the ambitious Northern Perak Water Supply Scheme (NWSS) to Penang.
Under the terms of the MOU, the involved parties are expected to reach a formal agreement within the next six months. The water supply infrastructure is projected to be ready for operation by the first quarter of 2031, with a long-term supply period spanning 40 years. This development is a follow-up to the July appointment of a joint venture between the company and PKNPK to develop and operate the water treatment and distribution facilities in Kerian, a key component of the NWSS.
Project Scope and Benefits
The Northern Perak Water Supply Scheme (NWSS) represents a substantial infrastructure initiative with an estimated total development value of RM5.0 billion. Its design focuses on transferring 1,500 million litres per day (MLD) of raw water from Sungai Perak to Bukit Merah Dam. Of this considerable capacity, 500 MLD is designated for the immediate irrigation needs of Northern Perak, while the remaining 1,000 MLD will be available for treatment to meet the domestic and industrial demands of the state. The project is poised to generate two distinct income streams for the company: construction revenue during the development phase and recurring income once the project achieves commercialisation.
Analyst View
Analysts note that this MOU marks a significant milestone towards the project’s realisation. While current forecasts remain unchanged pending the formalisation of approvals and finalisation of the agreement, the long-term prospects from the project’s revenue streams are expected to be highly beneficial. The investment bank maintains its positive stance on the company’s outlook.
