13 August 2025
Gamuda (GAM MK): Having Base Well Covered For The Long Run; BUY
Construction & Engineering | Construction
Target Price (Return): MYR6.52 (16%)
Price (Market Cap): MYR5.60 (USD7,665m)
ESG score: 3.4 (out of 4)
Avg Daily Turnover (MYR/USD): 96.4m/22.7m
Analyst
Adam Bin Mohamed Rahim
+603 2302 8101
adam.mohamed.rahim@rhbgroup.com
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | 18.1 | 9.8 | 24.4 | 24.7 | 45.6 |
| Relative | 22.6 | 7.7 | 23.0 | 26.9 | 48.0 |
| 52-wk Price low/high (MYR) | 3.59 – 5.60 | ||||
- Keep BUY and new MYR6.52 TP (SOP) from MYR5.86, 16% upside and c.3% FY26F (Jul) yield. We continue to favour Gamuda not just for its diverse geographical portfolio, but also the variety of jobs being tendered for – renewable energy (RE; comprising hydropower, wind, and solar), railway projects, and also data centres (DC) plus water related infrastructure. Hence, we believe GAM should trade higher than its current 23x FY26F P/E despite already +2SD higher than its 5-year mean P/E.
- Eyeing more green opportunities Down Under. Australia raised its Capacity Investment Scheme target to 40GW from 32GW in July, which is set to drive nearly AUD52bn in solar and wind technology investments. Recall: GAM, via DT Infrastructure, has already secured an onshore windfarm project in Queensland (MYR0.7bn) and a solar farm project in New South Wales (MYR1.8bn) in FY25 (Figure 1).
- The Integrated System Plan released by the Australian Energy Market Operator shows that, by 2050, Australia requires 10,000km of high voltage new transmission lines to carry RE nationwide. There are currently AUD53bn worth of transmission projects approved – earmarked or in planning – ahead of achieving Australia’s target of an 82% RE mix by 2030. In Dec 2024, GAM, via a JV with Seymour Whyte Constructions, was shortlisted for the AUD1.1bn Hunter Transmission Project. This ties well with GAM’s teaming agreement with Rohas Tecnic (RTEC MK, NR) – a leading Malaysian supplier of turnkey solutions for transmission networks – in Apr 2024 to bid for and build Australian transmission projects.
- We take comfort in GAM’s involvement in domestic RE-related and water projects such as the Ulu Padas Hydroelectric Dam (UPH) (expected operation in 2030) and North Perak Water Supply Scheme (NPWSS) (expected operation in 2031). They not only provide EPCC opportunities (total estimate: >MYR6bn) but also an avenue for recurring income (at least MYR50m pa combined as per our projections).
- No changes in our earnings estimates, but we take the opportunity to impute the valuations of the UPH and NPWSS projects into our SOP valuation applying a DCF valuation (WACC: 7%), with UPH having an assumed tariff of 31.5 sen/kWh (similar to the 162MW Project Oriole hydropower project in Sabah) and NPWSS having an assumed blended water tariff of MYR1.48/cu m (average of blended tariffs of Penang and Perak) with adjustments expected to take place every three years. We also ascribe a higher target P/E for both the overseas and domestic construction segments of 25.5x and 26x from 24x and 25x previously to reflect ample opportunities from the RE space in Australia and GAM’s domestic presence in water and hydropower projects not found within its key peers.
- Hence, we arrive at a new TP of MYR6.52, which bakes in an 8% ESG premium. Key risk: Slower-than-expected job replenishment.
Forecasts and Valuation
| Jul-23 | Jul-24 | Jul-25F | Jul-26F | Jul-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 8,268 | 13,347 | 15,099 | 17,723 | 20,482 |
| Recurring net profit (MYRm) | 860 | 912 | 976 | 1,405 | 1,579 |
| Recurring net profit growth (%) | 6.7 | 6.0 | 7.0 | 43.9 | 12.4 |
| Recurring P/E (x) | 37.03 | 34.92 | 33.10 | 23.00 | 20.46 |
| P/B (x) | 3.0 | 2.8 | 2.7 | 2.6 | 2.4 |
| P/CF (x) | 78.64 | 209.68 | na | 53.62 | 30.94 |
| Dividend Yield (%) | 4.5 | 1.4 | 1.8 | 1.8 | 1.8 |
| EV/EBITDA (x) | 32.96 | 31.26 | 24.15 | 18.06 | 16.52 |
| Return on average equity (%) | 7.9 | 8.2 | 8.4 | 11.5 | 12.1 |
Overall ESG Score: 3.4 (out of 4)
E Score: 3.4 (EXCELLENT)
S Score: 3.3 (EXCELLENT)
G Score: 3.3 (EXCELLENT)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis
In FY24, total emissions increased to 466,529 tonnes of CO2e (FY23: 158,150 tonnes of CO2e) which was in tandem with more ongoing jobs on hand.
| Jul-22 | Jul-23 | Jul-24 | Jul-25 | |
|---|---|---|---|---|
| Scope 1 | 8,428 | 7,245 | 31,224 | na |
| Scope 2 | 18,147 | 20,897 | 36,699 | na |
| Scope 3 | 5,709 | 130,008 | 398,606 | na |
| Total emissions | 32,284 | 158,150 | 466,529 | na |
Latest ESG-Related Developments
Expansion of its emissions traceability: In FY23, GAM began collecting its Scope 3 emissions data from suppliers and disclosing data from eight out of the 15 emission categories according to the GHG Protocol in addition to implementing carbon traceability using cloud-based ESG software.
ESG Unbundled
Overall ESG Score: 3.4 (out of 4)
Last Updated: 27 February 2025
E Score: 3.4 (EXCELLENT)
GAM is actively conducting various simulations, projections, and baseline studies on its greenhouse gas or GHG emissions. It continues to fine-tune its measurements and monitors processes to capture more scientific information, including its Scopes 1 and 2 GHG emissions. Gamuda Park is the umbrella programme encompassing its efforts in biodiversity and nature conservation.
S Score: 3.3 (EXCELLENT)
GAM is leading the construction industry standard with the establishment of the KVMRT Safety Training Centre. It is the first Malaysia-based subcontractor to win the Lendlease Safety Award for acing the global minimum requirement.
G Score: 3.3 (EXCELLENT)
57% of GAM’s board is independent, with full disclosures on director remunerations – this includes salaries and bonuses on a named basis. The company has an in-house investor relations team and holds regular investor meetings, embodying good transparency and disclosure practices.
Financial Exhibits
Key drivers
GAM’s earnings are underpinned by construction orders and property sales.
Key risks
A slower-than-expected orderbook replenishment.
| Jul-23 | Jul-24 | Jul-25F | Jul-26F | Jul-27F | |
|---|---|---|---|---|---|
| Recurring EPS | 0.15 | 0.16 | 0.17 | 0.24 | 0.27 |
| DPS | 0.25 | 0.08 | 0.10 | 0.10 | 0.10 |
| BVPS | 1.90 | 2.00 | 2.04 | 2.18 | 2.36 |
| Return on average equity (%) | 7.9 | 8.2 | 8.4 | 11.5 | 12.1 |
| Jul-23 | Jul-24 | Jul-25F | Jul-26F | Jul-27F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | 37.03 | 34.92 | 33.10 | 23.00 | 20.46 |
| P/B (x) | 3.0 | 2.8 | 2.7 | 2.6 | 2.4 |
| FCF Yield (%) | (1.2) | (3.1) | (2.0) | 0.9 | 2.3 |
| Dividend Yield (%) | 4.5 | 1.4 | 1.8 | 1.8 | 1.8 |
| EV/EBITDA (x) | 32.96 | 31.26 | 24.15 | 18.06 | 16.52 |
| EV/EBIT (x) | 37.35 | 36.64 | 28.23 | 20.38 | 18.61 |
| Jul-23 | Jul-24 | Jul-25F | Jul-26F | Jul-27F | |
|---|---|---|---|---|---|
| Total turnover | 8,268 | 13,347 | 15,099 | 17,723 | 20,482 |
| Gross profit | 1,697 | 1,840 | 2,437 | 3,323 | 4,062 |
| EBITDA | 1,023 | 1,109 | 1,468 | 1,952 | 2,088 |
| Depreciation and amortisation | (120) | (163) | (212) | (223) | (235) |
| Operating profit | 903 | 946 | 1,256 | 1,730 | 1,854 |
| Net interest | (78) | (173) | (216) | (245) | (247) |
| Pre-tax profit | 1,058 | 1,098 | 1,312 | 1,836 | 2,026 |
| Taxation | (221) | (155) | (302) | (404) | (426) |
| Reported net profit | 815 | 912 | 976 | 1,405 | 1,579 |
| Recurring net profit | 860 | 912 | 976 | 1,405 | 1,579 |
| Jul-23 | Jul-24 | Jul-25F | Jul-26F | Jul-27F | |
|---|---|---|---|---|---|
| Change in working capital | (166) | (262) | (1,293) | (692) | (299) |
| Cash flow from operations | 405 | 152 | (332) | 603 | 1,044 |
| Capex | (793) | (1,132) | (300) | (300) | (299) |
| Cash flow from investing activities | (233) | (1,262) | (201) | (202) | (202) |
| Dividends paid | (1,443) | (101) | (577) | (577) | (577) |
| Cash flow from financing activities | 771 | 910 | (192) | (320) | (671) |
| Cash at beginning of period | 2,794 | 3,169 | 2,699 | 2,331 | 2,339 |
| Net change in cash | 943 | (200) | (725) | 81 | 171 |
| Ending balance cash | 3,717 | 2,970 | 1,974 | 2,413 | 2,512 |
| Jul-23 | Jul-24 | Jul-25F | Jul-26F | Jul-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 3,169 | 2,699 | 2,331 | 2,339 | 2,846 |
| Tangible fixed assets | 5,322 | 5,444 | 4,829 | 4,734 | 4,629 |
| Total investments | 2,021 | 2,460 | 2,732 | 3,080 | 3,500 |
| Total assets | 23,867 | 26,521 | 28,939 | 30,849 | 33,074 |
| Short-term debt | 1,410 | 1,003 | 1,103 | 1,153 | 1,203 |
| Total long-term debt | 5,514 | 6,803 | 6,903 | 7,003 | 7,103 |
| Total liabilities | 12,941 | 15,000 | 16,984 | 18,039 | 19,240 |
| Total equity | 10,927 | 11,521 | 11,954 | 12,810 | 13,833 |
| Total liabilities & equity | 23,867 | 26,521 | 28,939 | 30,849 | 33,074 |
Figure 1: Jobs shortlisted/pre-qualified/eyeing to participate in Australia and New Zealand
| Project | Estimated overall contract size | Key timelines |
|---|---|---|
| Hunter Transmission project for the transmission line package – via the Gamuda-Seymour Whyte JV (Shortlisted) | c.AUD1.1bn (effective share for GAM not known) | Construction to commence in CY26 |
| New England Renewable Energy Zone – under Iberdrola Australia Enterprises (comprising Capella Capital, Gamuda Engineering, Samsung C&T Corporation and Ferrovial Transco Interaction) (Pre-qualified) | c.AUD3.7bn (effective share for GAM not known) | Preferred bidder selection in CY26 |
| Northland Corridor Highway Section 1: Warkworth to Te Hana (Shortlisted) | An estimated capital cost of between NZD2.9bn and NZD3.8bn was provided back in CY23 by the New Zealand Transport Agency | Construction to commence in late CY26 |
| Stage 1 of Marinus Link (750MW) for Balance of Works Package – via a JV with Samsung C&T Corp (Shortlisted) | Between AUD3bn and AUD3.8bn (effective share for GAM not known) | Construction to commence in CY26 with awards to be out by end CY25 |
| Sydney Metro West stations package (Shortlisted) | Likely MYR6bn for GAM’s share | Construction likely to commence in late CY25 or early CY26 |
| Direct Sunshine Coast Rail Line (Shortlisted) | Between AUD5.5bn and AUD7bn (effective share for GAM not known) | n.a. |
| Parramatta Integrated Station Development tender (Shortlisted) | Approximately AUD700m (effective share for GAM not known) | Award expected in CY26 |
| Victoria to New South Wales Interconnector (VNI) West (Eyeing to participate) | c.AUD3.9bn (effective share for GAM not known) | Construction to commence in Dec 2026 |
| ECI for Capricornia Energy Hub Pumped Hydroelectric System (begin construction in CY26) | Estimated at c.AUD1.5bn for GAM’s share | Construction to begin in CY26 |
| ECI for Oven Mountain Pumped Hydro in New South Wales via 50:50 Gamuda and Ferrovial JV (begin construction in late CY25) | Estimated at AUD0.9bn for GAM’s share | Construction to begin in late CY25 |
| Early works for Carmody’s Hill Wind Farm project in South Australia via DT Infrastructure | Estimated to be likely more than AUD740m | Final investment decision by late CY25 after which construction works are anticipated to commence in early CY26. |
Figure 2: Calculations as to why GAM should be able to reach its MYR40-45bn outstanding orderbook target by end CY25
| Value | |
|---|---|
| GAM’s estimated outstanding orderbook as of end June 2025 (A) | MYR37.2bn |
| Orderbook burn rate assumption between from Jul 2025 to Dec 2025 (MYR1bn per month) (B) | MYR6bn |
| GAM’s estimated outstanding orderbook by end CY25 if no new jobs announced at all between Jul 2025 and Dec 2025 (C) | MYR31.2bn (A-B) |
| Targeted orderbook level by end CY25 (D) | MYR40-45bn |
| Value of jobs that GAM needs to secure between Jul 2025 and Dec 2025 to hit a MYR40-45bn balance orderbook by end CY25 (E) | MYR8.8-13.8bn (D-C) |
| Value of additional wins that GAM required between Jul 2025 and Dec 2025 to hit the outstanding orderbook target of MYR40-45bn by end CY25 (G) | MYR8.8-13.8bn (E-F) |
| Conclusion | GAM has a total of MYR36bn of projects (MYR24bn for high probability ones and MYR12bn for ones with a more conservative probability) that they could win by end CY25. Meanwhile, GAM only needs between MYR8.8bn and MYR13.8bn worth of new job wins between June and Dec 2025 to hit its MYR40-45bn balance orderbook by end CY25. Hence, we view there is still of room for GAM to make up despite not securing the Suburban Rail Loop East Linewide Package, which was supposed to be c.MYR10bn for GAM’s share. |
Figure 3: FY25 (Jul) job wins for GAM
| Project | Contract Value |
|---|---|
| EPCC contract Ulu Padas Hydroelectric Dam in Sabah | MYR2.3bn |
| Boulder Creek Onshore Windfarm in Queensland | MYR0.7bn |
| DC in Cyberjaya for BCEI Malaysia related to foundation, civil and structural and architectural works | MYR0.5bn |
| Xizhi Donghu Mass Rapid Transit in Taipei, Taiwan | MYR3.2bn |
| EPCC contract for Goulburn River Solar Farm project in New South Wales, Australia | MYR1.8bn |
| Penang LRT Segment 1 (Silicon Island-Komtar) civil works | MYR5.0bn |
| Enabling works for Pearl Computing Malaysia-related to the 389-acre land in Negeri Sembilan | MYR1bn |
| Multiple projects comprising small DT Infrastructure jobs | MYR1.0bn |
| 345kV underground transmission line in Taiwan | MYR0.3bn |
| Kaohsiung Port project in Taiwan | MYR2.6bn |
| Total | MYR18.4bn |
Figure 4: Jobs with high percentage chance of securing by end CY25
| Project | Estimated Contract Size |
|---|---|
| Water supply scheme in Sabah | c.MYR4bn |
| Additional job value to Penang LRT | c.MYR3bn |
| Additional works from Xizhi Donghu Mass Rapid Transit | c.MYR3bn* |
| Likely to secure five DCs on land from two local renowned property developers and another two related to the Negeri Sembilan land. However, GAM conservatively expects three DCs out of seven to be awarded first with each having a value of MYR2bn | c.MYR6bn |
| Sydney Metro West stations package | c.MYR6bn |
| Potentially one renewable energy project from Australia | c.MYR2bn |
| Total | MYR24bn |
Note: *MYR3bn is part of the MYR8bn worth of additional works for the Xizhi Donghu Line maintenance depot plus the system and track works for two extension lines, which are the Keelung Line MRT and Minsheng Line MRT – they are supposed to be rolled out within the next three years.
Figure 5: Jobs with a more conservative chance of being secured by end CY25
| Project | Estimated contract size |
|---|---|
| Perak-Penang raw water transfer project | c.MYR4bn |
| Penang LRT system works | c.MYR3bn |
| Sarawak roads and highways | c.MYR1bn |
| A few pumped hydro projects in the pipeline but can conservatively assume one to be secured | c.MYR4bn |
| Total | c.MYR12bn |
Figure 6: GAM’s SOP valuation
| Valuation Component | Details | Value (MYRm) |
|---|---|---|
| Construction | ||
| Value for overseas construction (bulk from Australia) | FY26F PATMI: 594.0 | Target P/E: 25.5 | 15,147 |
| Value for Malaysia construction | FY26F PATMI: 428.0 | Target P/E: 26.0 | 11,128 |
| Concessions | ||
| Gamuda Water (O&M concession for SSP 3) | DCF: 545 | Stake: 80% | 436 |
| Property | ||
| Malaysia | Remaining GDV: 37,894 | 2,959.0 |
| Overseas | Remaining GDV: 13,475 | 425.0 |
| QTP: Artisan Park | Remaining GDV: 280 | 125.0 |
| QTP: Elysian | Remaining GDV: 700 | 146.0 |
| QTP: Eaton Park | Remaining GDV: 4,220 | 698.8 |
| Others (London/Melbourne) | Remaining GDV: 5,820 | 2,882.4 |
| Sub Total – NPV of future profit | 7,236.2 | |
| Property development BV | 7,345.6 | |
| RNAV of property development | 14,581.8 | |
| – 35% discount | -5,103.6 | |
| Value for property unit | 9,478.2 | |
| Investment properties | ||
| Investment properties | Carrying value: 691.5 | Stake: 100% | 692.0 |
| ERS Energy | ||
| ERS Energy | Equity Value: 667.0 | Stake: 30% | 200.0 |
| Projects | ||
| Ulu Padas Hydroelectric project | Equity Value: 2,713.5 | Stake: 45% | 1221.1 |
| North Perak Water Supply Scheme | Equity Value: 1,914.4 | Stake: 50% | 957.2 |
| Final Valuation | ||
| Holding company’s net cash/ (debt) | (4,445.5) | |
| SOP value | 34,814.0 | |
| Intrinsic value per share | 6.03 | |
| 8% ESG premium | 0.49 | |
| TP | 6.52 | |
Recommendation Chart
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-07-17 | Buy | 5.9 | 5.2 |
| 2025-07-01 | Buy | 5.9 | 5.0 |
| 2025-06-30 | Buy | 5.6 | 4.8 |
| 2025-06-27 | Buy | 5.6 | 4.7 |
| 2025-06-24 | Buy | 5.6 | 4.7 |
| 2025-06-17 | Buy | 5.6 | 4.8 |
| 2025-05-18 | Buy | 5.8 | 4.6 |
| 2025-05-05 | Buy | 5.8 | 4.4 |
| 2025-04-17 | Buy | 5.8 | 3.9 |
| 2025-03-27 | Buy | 5.8 | 4.3 |
| 2025-03-24 | Buy | 5.8 | 3.9 |
| 2025-02-06 | Buy | 5.8 | 4.5 |
| 2025-01-26 | Buy | 5.8 | 4.2 |
| 2025-01-20 | Buy | 5.8 | 4.3 |
| 2025-01-13 | Buy | 5.8 | 4.8 |
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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Malaysia
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