KUALA LUMPUR: Hong Leong Investment Bank (HLIB research) has raised its target price and earnings forecast for Gamuda Bhd after it won its largest data centre jobs yet.
Gamuda announced on Friday, that it received two letter of awards (LOAs) worth RM1.74 billion, for a hyperscale data centre in Elmina Business Park.
HLIB research raised its target price for the stock to RM6.88 a share, from RM6.11 a share previously.
It also lifted financial year 2025 and 2026 core earnings forecasts by 10.8 per cent and 6.9 per cent respectively, adjusting for margin assumptions and execution timeline.
HLIB research in a note today said data centre projects carry outsized earnings contribution considering shorter execution period and superior margins versus domestic tunnelling.
"We do not discount the possibility of Gamuda winning more works should there be future phases or scopes to be developed. "Gamuda's established regional presence, track record coupled with current growth in data centres investments could translate into regional penetration opportunities going forward," it said in a note.
The first contract is a construction, completion, testing & commissioning agreement of hyperscale data centre in Elmina Business Park by SimeProp worth RM815 million and the second one is a mechanical, electrical and plumbing fit out works for hyperscale DC in Elmina Business Park 1A by Pearl Computing Malaysia worth RM928.6 million.
The former will stretch for 21 months while the latter, 14 months.
Both contract wins marked Gamuda's biggest data centre contracts to date. HLIB research also foresees further opportunities for orderbook expansion as the company formalises contracts for Penang LRT (Gamuda's stake: ~RM5 billion), Upper Padas hydro (~RM3 billion) and Sydney Metro West-Western Tunnelling Package variation orders while award decision is expected for Suburban Rail Loop Package D amongst other infrastructure opportunities in Australia undertaken by its Australian unit DT Infrastructure, not to mention DCs and water projects locally.
Gamuda's share price high rose as high as three per cent in morning trade, before settling 2.8 per cent higher at RM6.22 a share as at 10am.Some 3.2 million shares changed hands.
