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- Analysts remain upbeat on Gamuda’s outlook, with CGS International Securities estimating the combined construction value of the Weasel Solar and Cellar Hills Wind farms at RM3.5 billion, based on an exchange rate of RM2.75 to the Australian dollar.
KUALA LUMPUR (July 1): Gamuda Bhd (KL:GAMUDA) climbed to its highest in nearly six months on Tuesday after the group announced it had secured a renewable energy (RE) project in Tasmania, Australia. Its share price rose 18 sen or 3.76% to RM4.97, valuing the company at RM28.68 billion.
Analysts remain upbeat on Gamuda’s outlook, with CGS International Securities estimating the combined construction value of the Weasel Solar and Cellar Hills Wind farms at RM3.5 billion, based on an exchange rate of RM2.75 to the Australian dollar.
The research house reiterated its 'add' call on the stock, with an unchanged target price of RM6, citing stronger order book visibility and high-margin prospects linked to its project ownership role. The new project builds on Gamuda’s existing RE experience, which includes three Early Contractor Involvement projects in Australia—two pumped hydro and one wind farm. The company is also working on the Upper Padas Hydro Dam in Sabah, due for completion by 2030, CGS International Securities noted.
The estimated internal rate of return for this Tasmanian project is in the low teens, it said, citing the company, with Gamuda possibly selling down its about 50% equity stake at a later stage.
It also noted the company’s role as project owner; Gamuda could secure higher-margin, direct-award contracts from FY2027 onwards, unlike standard engineering, procurement, construction and commissioning jobs in Australia, which typically yield mid- to high-single-digit margins, CGS International said.
Meanwhile, RHB Investment Bank Bhd (RHB IB) said the Tasmanian project marks Gamuda’s first foray into building up recurring income from RE projects in Australia. The company was previously solely involved in construction.
The research house estimates that the Weasel Solar Farm would have an engineering, construction and procurement value of RM600 million, while the Cellars Hill Wind Farm's construction cost would be around RM1.2 billion. Additionally, a 600MW battery energy storage system portfolio could contribute up to A$1 billion in construction value, based on benchmark capital costs.
“We think there is room for valuations to be higher-backed—not just for its data centre capabilities, but also for Gamuda’s involvement in railway and RE projects in Australia,” said RHB IB, adding that Gamuda is currently trading at 19.7 times FY2026 earnings, a premium over the Bursa Malaysia Construction Index’s 10-year average of 14 times.
RHB IB, which also kept its 'buy' recommendation on Gamuda, has raised its target price for Gamuda to RM5.86 from RM5.55. But it did not change its earnings forecast for the company, citing the need for further details such as tariffs and project tenures.
"However, we are taking the opportunity to ascribe a higher target price-to-earnings of 24 times from 22 times for Gamuda's overseas construction arm, to reflect stronger chances in clinching RE projects in Australia, especially after the group becomes an RE asset owner," RHB IB said, adding the revised valuation ties with the average valuation of its real estate peers in Australia.
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