GAMUDA: Strong Domestic Performance and Robust Order Book Underpin Positive Outlook

A leading construction and property development entity has reported its first-half FY26 core net profit at MYR442 million, marking a 7.5% year-on-year increase. This performance aligns with 42% and 37% of full-year estimates from both the investment bank and the broader market, with analysts anticipating a stronger second half for FY26.

Performance Highlights

The firm’s 2QFY26 construction segment saw a profit after tax (PAT) of MYR145.7 million, up 6% year-on-year. The net margin in this segment improved slightly to 4.8% from 4.7% in 2QFY25, primarily due to a higher proportion of domestic earnings, which constituted 53% of the total in 2QFY26 compared to 47% in the previous year. Concurrently, the property arm registered a 3% year-on-year rise in its 2QFY26 PAT. Property sales for 1HFY26 reached MYR1.6 billion, representing 29% of the internal MYR5.5 billion sales target for the full fiscal year.

Future Prospects and Order Book

The company’s property division is poised for substantial growth, with a MYR10 billion launch pipeline projected over the next 12 months. Approximately 40% of this pipeline originates from four new deals in Vietnam, with the remainder from Singapore’s Chencharu Close project and various Malaysian townships.

The ambitious order book target of MYR50 billion by end-CY26 appears within reach. As of end-January, the remaining order book stood at MYR44 billion. To achieve the target, the company will need to secure approximately MYR20 billion worth of new jobs in CY26. Highly anticipated potential project wins include the Sabah water supply scheme (estimated at MYR3-4 billion), the Direct Sunshine Coast Rail Line in Queensland (valued around AUD5.5-7 billion), and several data center (DC) projects in Negeri Sembilan. The firm maintains a positive outlook on the DC space, anticipating a second wave of build-ups potentially larger than the first. Exploration for DC opportunities extends beyond established hubs to new states like Johor, recognizing the growth potential driven by major hyperscalers such as Microsoft. Furthermore, an Australian pipeline of opportunities valued over AUD50 billion is eyed for FY27-29F.

Analyst View and Recommendation

Despite no changes to earnings estimates, as current results are deemed within expectations, the investment bank maintains a “BUY” recommendation. The target price for the stock is set at MYR6.26, indicating a significant potential upside of 51% from the last traded price of MYR4.15. This optimistic view is underpinned by the company’s strong data center capabilities and the extensive pipeline of opportunities, particularly in Australia. However, a key downside risk highlighted is slower-than-expected job replenishment trends.