Gamuda shares log new record high while analysts scramble to raise target prices

• The stock advanced as much as 19 sen or about 2% to reach RM9.79. It was trading at RM9.78 at 12pm, giving the company a market capitalisation of nearly RM28 billion. More than 2.9 million shares changed hands so far.

KUALA LUMPUR (Dec 13): Shares of Gamuda Bhd (KL:GAMUDA) notched a fresh all-time high on Friday, as analysts projected robust quarters ahead for the construction powerhouse, fuelled by contract wins and a strong project pipeline.

The stock advanced as much as 19 sen or about 2% to reach RM9.79. It was trading at RM9.78 at 12pm, giving the company a market capitalisation of nearly RM28 billion. More than 2.9 million shares changed hands so far.

Core net profit for the first quarter ended Oct 31, 2024 (1QFY2025) made up 17% of the consensus estimate for the full year ending July 31, 2025 (FY2025). Analysts scrambled to raise their target prices (TPs) following the recent rally, optimistic that earnings would pick up pace on higher property sales and progress billings.

TA Securities, which now has the highest TP of RM12.31 among 21 research houses covering Gamuda, said that the company could still add a couple more contracts to its already record-high RM30 billion order book in the coming weeks.

That includes the Penang Light Rail Transit and the Ulu Padas hydroelectric water scheme projects, which could raise Gamuda’s order book above the RM30 billion-to-RM35 billion target, the research house said.

Shares of Gamuda have soared over 112% year-to-date, tracking strong gains in the construction sector fuelled by optimism about the roll-out of major infrastructure projects. The stock has also benefitted from a slew of news of highly lucrative jobs to build data centres.

Gamuda's shares currently trade at 21 times forward price-earnings ratio (PER), compared with 2023 average of 10 to 12 times, Bloomberg data shows.

Analysts pencil in an average forward PE multiple of 24 times to Gamuda’s construction business, which makes up 60% of its average TP, while the remainder comes from its property arms’ asset value.

Despite the strong rally, analysts are still bullish on Gamuda with 19 ‘buy’, two ‘hold’ and no ‘sell’ calls. The consensus 12-month TP is RM10.46, according to Bloomberg, implying a potential return of over 7% from its last price of RM9.75.

About half of the research houses have TPs of at least RM11, following the first-quarter results. Hong Leong Investment Bank, which raised its TP to RM11.03, said Gamuda’s order book could potentially swell to RM40 billion by the end of 2025.

“We like the stock on the back of its accelerating contract wins as it digests a high certainty pipeline, while recent successful penetration into Australian renewable energy space could unlock a long-term stream of megaproject opportunities,” the house said.

On Thursday, Gamuda reported that its net profit climbed 5.3% year-on-year to RM205.39 million in 1QFY2025, as revenue jumped on improved contributions from all segments. Quarterly revenue rose 47% to RM4.14 billion from a year earlier.

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