GAMUDA Bhd shares have retained its ‘Outperform’ call with a 52-week target price of RM4.90 at Kenanga Research after announcing that the company was disposing of a 389-acre land in Springhill, Port Dickson to Pearl Computing for RM455.2 million along with RM1 billion in enabling infrastructure works.
“We view the deal positively as it marks the beginning of a large-scale data centre development with an estimated total construction value of up to RM20 billion.
“Given Gamuda’s direct involvement in the land deal and infrastructure works, we believe it is well-positioned to secure future data centre contracts,” Kenanga Research said in a note released today (May 9).
It said that while the land disposal itself may not yield significant profits, it positions Gamuda to capitalise on future data centre projects on the site.
The initial RM1b enabling works are set to commence soon, including earthworks scheduled for completion by 3QCY25, the construction of a 65 million litres per day water treatment plant by 2QCY27, and an off-river storage facility by 4QCY28.
“These developments aim to provide a comprehensive, ready-to-build platform for hyperscale clients, encompassing civil works, utility connections, and water infrastructure,” it said.
Kenanga Research noted the following risks to our call: (i) delay in the roll-out of key public infrastructure projects in Malaysia such as the MRT3, which may delay margin recovery, (ii) rising input costs and labour shortage, (iii) risks associated with operations in overseas markets such as changes in government policies towards foreign businesses and forex, and (iv) liquidated ascertained damages (LAD) from cost overrun and delays.
Gamuda shares closed RM4.38 yesterday, 6.8% down year-to-date. Its 52-week high/low was RM5.38/RM2.70. —TMR
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