Gamuda orderbook seen hitting RM60bil as contract pipeline builds

KUALA LUMPUR: Gamuda Bhd's orderbook could rise to RM60 billion by year-end, about 20 per cent above its target, as strong contract wins and a visible pipeline support earnings growth, according to CGS International Securities Malaysia Sdn Bhd.

CGS maintained its "Add" call and RM6.05 target price, based on a sum-of-the-parts valuation, with the construction division valued at 19 times financial year 2027 (FY27) earnings.

Gamuda's latest A$624 million (about RM1.8 billion) Australian contract takes its FY27 year-to-date order wins to RM10.2 billion, lifting its orderbook to RM62.5 billion as at September 2026, CGS said.

The latest award covers the Elizabeth Drive Upgrade and Mamre Road Upgrade Stage 2 projects in Western Sydney and was secured by a 50:50 joint venture between Gamuda Engineering Australia and B.M.D Constructions Pty Ltd.

"Gamuda guided for a pre-tax margin of 5.0 per cent with a rise-and-fall provision for an increase in raw material costs embedded in the contract terms," CGS International analysts Chong Tjen-San said in a note.

The projects further expand Gamuda's road infrastructure portfolio in New South Wales, where it has undertaken the Coffs Harbour Bypass, the M1 Pacific Motorway Extension Black Hill to Tomago and the Richmond Road M7 Upgrade.

Chong said the latest win was significant as it came from a recurring client, the NSW state government, strengthening Gamuda's track record in road and rail infrastructure in the state.

Gamuda also secured the Sydney Metro West-Parramatta Integrated Station Development project in September, its sixth win out of nine stations along the Sydney Metro West line.

CGS estimates Gamuda will end CY26 with an orderbook of RM55 billion to RM56 billion, about 10 per cent above its RM50 billion target, assuming a monthly orderbook burn rate of RM1 billion and no further contract wins.

However, it expects the orderbook to reach RM60 billion by end-CY26, given the strength of the group's project pipeline.

"In our view, the more important catalyst for Gamuda now is earnings delivery (vs. contract wins) and the ability to beat Bloomberg consensus' EPS forecast for FY27F," Chong said.

CGS expects Gamuda to report a core net profit of RM376 million for 4QFY26, up 13 per cent year-on-year and 60 per cent quarter-on-quarter, when it releases its results on Sept 29.

It expects earnings momentum to continue into FY27, with first-quarter earnings potentially marking a meaningful inflection point as major domestic construction projects move further up the S-curve.

CGS maintained its 23 per cent two-year EPS compound annual growth rate for FY26F-FY28F, saying the group's S-curve earnings trajectory remains intact.

Other analysts also remain positive about Gamuda.

Hong Leong Investment Bank (HLIB) maintained its "Buy" rating and RM5.27 target price, based on a 10 per cent discount to its SOP valuation of RM6.02.

HLIB cited Gamuda's growing presence in Australia's real estate market, robust orderbook replenishment supporting earnings visibility into FY27-FY28, and its sizeable project pipeline and exposure to Vietnam's property market.

The research house expects earnings growth to accelerate from CY27 as projects progress further up the S-curve and higher-margin contributions begin to materialise.

"With Gamuda securing RM10 billion worth of jobs in just two months into FY27, we believe there is upside risk to our RM20bn job replenishment assumption," it said in a note.

RHB Research also maintained its "Buy" rating and RM6.20 target price, implying about 30 per cent upside, with an estimated FY27F dividend yield of 2 per cent.

RHB made no changes to its earnings estimates, saying the latest contract win remains within its RM25 billion FY27 job replenishment target.

A potential catalyst would be a faster-than-expected margin expansion as major data-centre projects progress, particularly after Gamuda secured about RM7 billion of new data-centre-related contracts in 2026, RHB said.

"We believe the growth of the Western Sydney region and opening of the WSIA will drive greater road sector investments in the coming years," the firm said.

For Gamuda, key downside risks include delays in contract awards and sustained high raw material costs, while potential catalysts include easing input costs, additional construction wins and stronger property sales.

Gamuda's major shareholders include the Employees Provident Fund (EPF), with an 18 per cent stake, and Amanah Saham Nasional, with an 8.6 per cent stake.

The stock has fallen from RM4.94 at the start of the year, while its lowest point for the year was RM3.73 on March 31. Its market capitalisation currently stands at about RM29.25 billion.