KUALA LUMPUR: Gamuda Bhd could surpass RM30 billion in contract wins for financial year 2027 (FY27), having secured about half that amount in less than three months.
Hong Leong Investment Bank (HLIB) Research sees upside potential to its full-year forecast following Gamuda's latest RM3.7 billion rail contract win in Taiwan.
The contract involves the design and construction of systems and trackworks for the Keelung Mass Rapid Transit (MRT) project, secured through a joint venture with MiTAC Information Technology Corp.
Gamuda's effective share of the contract is RM2.7 billion, based on its 72.8 per cent stake in the joint venture.
Awarded by the Department of Rapid Transit Systems of the New Taipei City Government, the project covers a 15.6km alignment serving 13 stations across Taipei City, New Taipei City and Keelung City.
It has a completion period of 2,820 days, or about 7.7 years.
The project forms part of additional works linked to the Xizhi-Donghu MRT project, which Gamuda secured in October 2024 for RM4.3 billion, with an effective share of RM3.2 billion.
HLIB previously estimated the additional works at about RM10 billion, with roughly RM6.5 billion in potential contracts still to be awarded following the latest win.
These include systems and trackworks for the Minsheng Line MRT and a maintenance depot for the Xizhi-Donghu Line MRT.
HLIB expects the Keelung MRT contract to generate a profit-before-tax margin of about eight per cent, supported by its cost-plus structure.
Nevertheless, earnings contributions from Taiwanese rail projects are expected to remain minimal during the first two years, as work initially focuses on design and engineering.
Meaningful contributions from the Keelung MRT project are expected to begin only in 2028.
HLIB expects Gamuda's earnings to accelerate from calendar year 2027 as projects progress beyond their early execution stages and higher-margin contributions materialise.
The research house maintained its "Buy" recommendation on Gamuda, with an unchanged target price of RM5.75, based on a 10 per cent discount to its sum-of-parts valuation of RM6.39.
It cited Gamuda's growing presence in Australia's renewable energy sector, strong order book replenishment supporting earnings in FY27 and FY28, and exposure to Vietnam's property market as key investment attractions.
Meanwhile, RHB Research said Gamuda's year-to-date FY27 contract wins had reached about RM15.2 billion, against its RM25 billion replenishment target.
It expects further contract wins before year-end, particularly in the data centre segment and Australia's railway sector, including Queensland's Direct Sunshine Coast Rail Line.
RHB Research said Gamuda's outstanding order book stood at about RM63.9 billion, with Taiwan accounting for approximately 21 per cent.
Assuming a monthly order book burn rate of RM1.4 billion from October to December, the research house estimates that the order book could remain at about RM59.7 billion by end-2026, even without further contract wins.
RHB Research also expects the remaining Taiwan contracts, estimated at RM6.5 billion, to be awarded gradually over the next two to three years.
It expects the Keelung MRT contract to generate a profit-before-tax margin of about eight per cent, with costs likely to be passed through based on a producer price index benchmark.
The research house maintained its earnings forecasts for Gamuda, as the latest contract win was within its FY27 replenishment target.
It also retained its "Buy" call and sum-of-parts-derived target price of RM6.20, which includes an eight per cent environmental, social and governance premium.
The target price implies a 28 per cent upside, alongside an estimated FY27 dividend yield of about two per cent
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