Second Recurring Income Project in Malaysia.
Rationale for report: Company Update
Quick Take
| YE to Jul | FY24 | FY25F | FY26F | FY27F |
|---|---|---|---|---|
| FD Core EPS (sen) | 32.3 | 17.5 | 23.4 | 28.1 |
| PE (x) | 15.6 | 28.7 | 21.5 | 17.9 |
Source: AmInvestment Bank Bhd
- On 16 July 2025, Gamuda Berhad (Gamuda) announced that its 50:50 joint venture with Perbadanan Kemajuan Negeri Perak (JV) was appointed by the Perak State Government to develop and operate water treatment and distribution infrastructure in Kerian, Northern Perak. This project carries an estimated total development value of RM5bil.
- The JV will develop and operate water treatment and distribution infrastructure in the Kerian district in Northern Perak as well as supply of treated water to the Kerian Integrated Green Industrial Park and the sale of excess treated water to Penang.
- This Northern Perak Water Supply Scheme aims to transfer 1,500MLD (mil litres/day) of raw water from Sungai Perak to the Bukit Merah Dam.
- Maintain BUY with TP of RM5.50. We view the announcement positively as Gamuda continues to build recurring income base to counter the cyclical nature of the construction and property segments. This development marks Gamuda’s second recurring income project in Malaysia after Sabah Hydro. However, the details are still sketchy at current juncture. Gamuda will likely be securing the construction contract in FY26 as the development is subject to approval from the relevant regulatory authorities. The PBT margin is expected to be between 8-10%.
TABLE 1: VALUATION MATRIX
| YE 31 Jul | FY23 | FY24 | FY25F | FY26F | FY27F |
|---|---|---|---|---|---|
| Revenue (RM mil) | 8,220.4 | 13,346.7 | 15,541.1 | 21,726.5 | 26,823.9 |
| Core net profit (RM mil) | 814.7 | 912.1 | 1,054.3 | 1,408.0 | 1,691.6 |
| FD Core EPS (sen) | 30.5 | 32.3 | 17.5 | 23.4 | 28.1 |
| FD Core EPS growth (%) | 7.1 | 6.0 | (45.8) | 33.5 | 20.1 |
| Consensus Net Profit (RM mil) | |||||
| DPS (sen) | 50.2 | 16.3 | 8.5 | 11.4 | 13.7 |
| PE (x) | 16.5 | 15.6 | 28.7 | 21.5 | 17.9 |
| EV/EBITDA (x) | 33.0 | 31.6 | 21.0 | 15.7 | 13.0 |
| Div yield (%) | 10.3 | 3.3 | 1.7 | 2.3 | 2.8 |
| ROE (%) | 7.9 | 8.2 | 8.9 | 10.9 | 11.9 |
| Net Gearing (%) | 34.8 | 44.9 | 42.6 | 31.0 | 19.6 |
Source: Company, AmInvestment Bank Bhd estimates
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