UOB Kay Hian
Date of Report: Wednesday, 10 September 2025
Gamuda Berhad (GAM MK): Record Orderbook Sets the Stage for Exponential Growth, But Execution Is Key

Overview: Gamuda’s Meteoric Rise and the Execution Challenge Ahead

Gamuda Berhad has demonstrated outstanding performance over the past twelve months, riding the sector upcycle and reinforcing its presence in key domestic and international markets. The company’s ability to consistently replenish its orderbook has resulted in a record-high outstanding orderbook of RM39.8 billion by 3QFY25. However, with the share price rallying impressively by 244% since 2024, current valuations appear fair, and the investment thesis pivots to Gamuda’s ability to deliver exponential earnings growth in the coming years. UOB Kay Hian has downgraded Gamuda to HOLD, citing modest capital upside at this juncture.

Orderbook Dynamics: Sustained Replenishment and Pipeline Strength

Gamuda secured an astounding RM17.6 billion worth of contracts in FY25, with a further RM2.6 billion clinched in FY26 thus far. The company maintains strong visibility on additional pipeline wins, with management guiding for an outstanding orderbook of RM40–45 billion by end-2025. To meet this target, Gamuda needs to secure at least RM8–9 billion more in new contracts, which is likely achievable given several pending tender outcomes.

FY25 Secured Contracts: Detailed Breakdown

FY26 and Beyond: Robust Pipeline and Potential Upside

Gamuda continues to replenish its orderbook, with two contracts worth RM2.6 billion already secured in FY26. The company is well-positioned to achieve projected orderbook replenishments of RM20–25 billion in FY26, supported by visibility on domestic infrastructure projects and renewable energy opportunities in Australia.

Potential FY26 Orderbook Wins

• 2 hyperscale data centres at Eco Business Park V (Malaysia) – RM2,138m, 8% margin
• Northern Coastal Highway, Limbang – RM500m
• Capricornia & Oven Mountain Hydroelectric (Australia, JV) – RM4,900m each, 10-12% margin
• Penang-Perak Water Infrastructure (Malaysia) – RM5,000m
• Additional works for Xizhi-Donghu MRT (Taiwan) – RM3,000m
• Negeri Sembilan DC (Malaysia) – RM2,000m, up to 15% margin
• Other Malaysia DC tenders – RM2,000m

Total potential wins are estimated at RM26.5 billion, providing significant upside risk for Gamuda’s future earnings trajectory.

Earnings Outlook: S-Curve Acceleration and Exponential Growth

Despite the enormous orderbook, Gamuda’s earnings growth in FY25 is projected to be a relatively modest 14%, as several flagship projects are still ramping up. However, as projects like Penang Mutiara LRT Segment 1, Upper Padas Hydroelectric Dam, major data centres, and Taiwan’s rail infrastructure scale up, earnings growth is forecasted to accelerate significantly in FY26–27, with expectations of 20–36% growth.

Key Financials and Forecasts

Valuation: Premium Justified, But Limited Near-Term Upside

Gamuda’s current valuation stands at 22x FY26F PE, which is 1.5 standard deviations above its historical mean. This premium reflects its record-high orderbook and multi-year earnings upcycle, but with the share price at RM5.60 and target price at RM5.75, the implied upside is only 2.7%. Further re-rating will require substantial earnings outperformance or major new contract wins, expected only in 2HFY26.

Segmental Revenue and EBIT Forecasts

Balance Sheet and Cash Flow Highlights

Gamuda’s total assets are forecast to increase from RM26.5 billion in FY24 to RM41.1 billion in FY27, driven by growing project scale and orderbook. Net debt to equity will rise from 45.8% in FY24 to 83.0% by FY27, reflecting heavy investment in growth. Operating cash flow is expected to be volatile, with a significant outflow in FY25 due to working capital changes and capex.

Key Metrics for FY24–27

• EBITDA margin improving from 8.3% in FY24 to 10.7% in FY27
• Net margin rising from 6.8% in FY24 to 7.7% in FY27
• ROE strengthening from 9.4% in FY24 to 15.4% in FY27
• Interest cover maintained above 6x

ESG Commitments: Sustainability and Governance in Focus

• Environmental: Gamuda aims to cut greenhouse gas emission intensity by 30% by 2025 and 45% by 2030.
• Social: Workforce diversity is notable, with female employees comprising 43% and male 57%.
• Governance: Independent directors make up 57% of the board.

Stock Data and Shareholder Information

• Bloomberg ticker: GAM MK
• Shares issued: 5,801 million
• Market cap: RM32,253.4 million (US\$7,640.6 million)
• 52-week high/low: RM4.06 / RM2.76
• YTD performance: +17.3%
• Major shareholders: Employees Provident Fund Board (17.8%), Amanah Saham Nasional Bhd (4.1%), Generasi Setia M Sdn Bhd (4.0%)

Valuation Summary and Recommendation

Gamuda is rated HOLD with a target price of RM5.75, reflecting a SOTP valuation and increased option value for its water concession business. The current market rally has priced in much of the company’s growth prospects, and further upside will hinge on the successful delivery and ramp-up of its flagship projects.

Conclusion: Gamuda’s Next Phase Hinges on Execution

Gamuda stands at a pivotal moment — its record orderbook and strong pipeline have generated robust investor optimism and valuation premiumisation. The next leg of growth will be determined by its ability to execute and translate its massive contract wins into bottom-line acceleration, particularly in FY26-27. Investors should watch for progress billings and delivery milestones on key projects, as these will be the primary catalysts for future re-rating and share price appreciation.
Contact UOB Kay Hian for further analysis or trading inquiries.