Analysts from MIDF Amanah Investment Bank Bhd (MIDF Research) and RHB Investment Bank Bhd (RHB Research) have reaffirmed their BUY recommendations on Gamuda Bhd, citing strong prospects in both domestic and international markets.
On that note, MIDF Research maintained its target price (TP) at RM10.68, reflecting an 11.3% potential upside, while RHB Research set a higher TP of RM11.67, anticipating a 22% upside. Both research houses expect improved performance in the coming quarters, supported by robust order book growth and new project wins.
Gamuda reported a core net profit of RM199.8 million for the first quarter of the financial year 2025 (1Q25), a modest year-on-year (YoY) increase of 2.9%. Although the result slightly missed expectations, analysts view it as within forecasts due to the anticipation of stronger quarters ahead.
MIDF Research noted that construction revenue surged by 37.9% YoY to RM3.09 billion, driven largely by overseas projects, with construction net profit rising 20% to RM141.5 million. RHB Research, meanwhile, highlighted the improved net margin in the construction division, which rose to 4.6% from 4% in the previous quarter, bolstered by an increased mix of domestic projects.
The group's order book remains a key growth driver, standing at RM30 billion as of October 2024. MIDF Research anticipates it could expand to between RM40 billion and RM45 billion by the end of 2025, with upcoming awards including the Penang Light Rail Transit project and a water supply scheme in Sabah. Similarly, RHB Research expects Gamuda to secure an additional RM18 billion in projects for FY2025, further solidifying its pipeline.
In the property segment, Gamuda's revenue climbed 81.9% year-on-year to RM1.10 billion; however, net profit dipped by 17%, attributed to the completion of the Celadon City project in Vietnam. MIDF Research noted that quick-turnaround projects such as Eaton Park Phase 2, which achieved RM1 billion in sales within a weekend, are expected to bridge this gap. RHB Research added that other Vietnam-based developments, including Hai Phong, are likely to contribute to earnings growth alongside the group's RM6.9 billion in unbilled sales.
Gamuda's venture into digital infrastructure is also drawing attention. The group recently entered into a partnership to deliver Google Distributed Cloud services, targeting an addressable market of RM36 billion. MIDF Research highlighted the group's innovative approach, including bundled offerings of land, water and renewable energy (RE) for data centres.
RHB Research echoed this sentiment, noting the significant opportunities in the RE space in Australia, where Gamuda is eyeing A$25 billion worth of projects.
Both research houses are confident in Gamuda's ability to maintain its upward trajectory, backed by its diversified operations, high-value projects, and strategic ventures into emerging sectors. The stock remains a favourite pick in the construction sector, with analysts highlighting its resilience and strong execution capabilities.
