GAMUDA: Major Data Centre Contract Fuels Growth, Investment Bank Reiterates ‘Buy’ Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading contractor has secured a significant RM2.1 billion contract for the development of a hyperscale data centre in Eco Business Park V, Selangor. The project, awarded by Quantum Alpha Sdn Bhd, a wholly-owned unit of Eco World Development Group Bhd (ECOWLD), reinforces the company’s strategic position within the rapidly expanding hyperscale data centre segment.
The extensive scope of work for the contract includes the construction, completion, testing, and commissioning of two data centre blocks (shell and core), a consumer substation, a water reservoir, and associated facilities. Works are slated to commence by the end of September 2025, with a targeted completion in the third quarter of 2027.
Strategic Expansion and Future Outlook
This landmark win is viewed as a strategic milestone, highlighting the company’s capabilities as a prominent player in the critical data centre infrastructure sector. While the official off-taker has not been disclosed, industry speculation points towards Google, given the activities of Pearl Computing Malaysia Sdn Bhd, widely considered Google’s regional proxy. The report further suggests that the company is a likely frontrunner for the subsequent mechanical and electrical (M&E) works for the project, estimated to be worth an additional RM2.5 billion to RM3.0 billion, with contract finalisation expected by the first quarter of 2026. This potential follow-on work aligns with industry practice, where M&E installation typically follows the core and shell phases.
Financial Impact and Valuation
Financially, the new contract boosts the group’s outstanding order book to approximately RM39.8 billion. This substantial order book translates to 3.8 times the FY24 construction revenue, providing strong earnings visibility. Management anticipates an 8% PBT margin for this project, which is projected to contribute an estimated RM130.0 million in cumulative net profit over the construction period.
Despite this significant award, TA Securities maintains its FY25-27F earnings projections, noting that the contract falls within its existing replenishment assumptions for FY26. The investment bank has reiterated its “Buy” call on the stock, maintaining its Sum-of-Parts (SOP) derived target price of RM6.43. This target price incorporates a 3% ESG premium, reflecting the company’s 4-star ESG rating.
