GAM: Major Australian Contract Bolsters Order Book, Analyst Maintains Buy Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A prominent infrastructure and engineering firm has significantly expanded its order book with a substantial contract win in Australia, reinforcing its position in the region’s burgeoning infrastructure market. The new project, valued at MYR2.7 billion, represents the fourth major Australian contract for the company in the current fiscal year.
Contract Details and Financial Impact
The contract, secured through a 50:50 joint venture, entails the Balance of Works (BOW) Package for the Marinus Link Stage 1 project. This comprehensive package includes the construction of converter station buildings, civil works for land cables, and other onshore installation tasks crucial for the interconnector. Works are slated to commence in early CY26, with an estimated pre-tax profit margin of approximately 5% for this specific package.
This latest win contributes to approximately MYR5 billion in new jobs secured for the year-to-date FY26 period, pushing the company’s total order book to an impressive MYR37.9 billion.
Future Outlook and Order Book Targets
Management remains confident in achieving its order book target of MYR40-45 billion by the end of calendar year 2025. This would require securing an additional MYR3 billion in new projects. The company is actively pursuing several highly anticipated potential wins, including the Sydney Metro West stations package (estimated at AUD2-3 billion, company’s share) and the Carmody’s Hill Wind Farm project (estimated at MYR1 billion, company’s share).
Looking further ahead to calendar year 2026, the company aims for an order book level of MYR50-55 billion. This ambitious target would necessitate replenishing MYR25-30 billion worth of new jobs during CY26. The firm is currently bidding on tenders totaling an estimated MYR50 billion across domestic, Australian, Singaporean, and Taiwanese markets.
Analyst’s Stance and Valuation
Despite the new contract, analysts have maintained their earnings estimates, as this latest project win aligns with their existing FY26 job replenishment assumptions. The investment bank has reiterated its “BUY” recommendation, with an unchanged target price of MYR7.00.
The stock is currently trading at 17.4 times its FY27F P/E, which represents a premium compared to the Bursa Malaysia Construction Index’s 10-year mean P/E of 14 times. However, analysts believe this premium is justified by the company’s robust data centre capabilities and a significant opportunity pipeline in Australia, valued at over AUD50 billion for FY27F-29F. A key risk to this positive outlook remains slower-than-expected job replenishment trends.
