---
endpoint: analytics
pattern: Infrastructure
status: done
latency_ms: 215216
conversation_id: 15761804-95d8-4469-adeb-c87ac8b95d5d
citations: 8
created: 2026-05-31 19:28:18Z
---

# What catalysts could drive upside/downside for Gamuda in the next 12–18 months?

# Gamuda Berhad (GAM MK) — Catalyst Map for the Next 12–18 Months

Gamuda has been re-rated by CLSA into an Outperform name pegged to an orderbook-driven PE-to-growth model. Catalysts on both sides of the tape are essentially determined by (a) the velocity of new contract wins, (b) execution on a now-RM44bn orderbook, and (c) macro/policy exposures in its three core markets (Malaysia, Taiwan, Australia). Below is the structured catalyst map.

---

## 1. Upside Catalysts

### A. New contract awards — the #1 share-price driver
CLSA explicitly identifies "new orderbook wins" as the key catalyst [1]. The areas where market expectations are NOT yet fully priced in span all three of Gamuda's core geographies [2]:
- **Malaysia**: incremental data centre awards, public infrastructure, renewable energy
- **Taiwan**: additional public infrastructure (MRT) packages
- **Australia**: renewable energy + public infrastructure

The orderbook trajectory tells the story: management has been guiding the unbilled construction orderbook to **RM40–45bn by end-CY2025** from ~RM30bn previously. As of the latest quarterly report (Q2 FY26, ended Jan-2026), the orderbook hit a record **RM44 billion** with **RM8 billion in unbilled property sales** [11] — already at the lower end of guidance. CLSA notes historical share-price re-ratings tend to follow large orderbook increases (the orderbook went from RM4.5bn in 2021 to RM32bn in 2024 — a 7x lift) [7].

### B. Specific upcoming/pipeline projects to track
The visible CLSA-flagged pipeline that could convert in the next 12–18 months [4]:

| Upcoming Project | Size (RMbn) | Status |
|---|---|---|
| Penang LRT (Segment 1) — Malaysia | 4.8 | Offered by Penang Government |
| Australia Line Wide Systems Package | 5.0 | Tendered, results mid-2025 |
| DTI Solar Farm — Australia | 2.0 | Tender results expected soon |
| GEA RE project — Australia | 12.0 | Signed Early Contractor Involvement |
| Xizhi Donghu Part 2 — Taiwan | 10.8 | Obligated additional works |

Some have already converted: Gamuda secured the **AUD2.7bn (~RM7.32bn) Sydney Metro West Stations Package West in Dec-2025** — its largest-ever Australian project win [10] — plus Marinus Link BOW (AUD994m), Carmody's Hill Wind Farm (AUD265m), and the latest Kaohsiung Xiaogang-Linyuan Line MRT awarded **7 May 2026 at NTD 26.4bn (~RM3.30bn)** [14]. The Penang LRT Mutiara Line Phase 1 at **RM7.9bn** (revised from RM8.3bn) was confirmed via SRS Consortium (60% Gamuda) [15].

### C. Data centre buildout — a structural multi-year tailwind
- CLSA's channel checks (Knight Frank and a major Malaysian colo operator) reinforced that **Malaysian data centre demand remains intact** despite earlier AI-diffusion concerns; large US tech companies will continue building [12]. Gamuda and IJM are CLSA's preferred contractor picks on this thesis.
- Earnings outlook for FY26: management guides earnings will be "largely driven by the domestic construction projects including construction of several data centres" [10]. As of Jan-2026, Gamuda already has three named hyperscale jobs in delivery: Elmina (RM1.74bn, 99% core-and-shell complete), Port Dickson enabling works (RM1.01bn), and Eco Business Park V (RM2.138bn). Importantly, "**Discussions with multinational clients for additional data centre projects remain active and ongoing**" — implying further awards on the come [12].

### D. Sabah Ulu Padas integrated hydro + floating solar project
Revised Letter of Notification signed **5 May 2026** materially upgraded the project to an "Integrated Project":
- **187.5 MW hydroelectric + 150 MWac floating solar**, with **annual energy yields of 1,052 GWh + 300 GWh** respectively [13]
- Concession: 40-year hydro / 25-year solar; **revenue expected to exceed RM450 million p.a.**
- PPA execution targeted by 31 Dec 2026 — a key 18-month milestone to lock in financing terms
- A complementary Sabah Water Augmentation Project (SBAUP, Phase 1: 350 MLD, target 2029) bolts onto the same dam infrastructure

This converts a contractor into a long-duration concession owner — supportive of higher recurring earnings quality and a justified PE premium.

### E. Sectoral momentum and re-rating optionality
- Malaysian **Construction was the best-performing sector in May 2025**, driven by positive newsflow around data centre jobs and infrastructure — direct order-book visibility for Gamuda [16].
- CLSA argued the AI-DC sell-off was an opportunity, not a thesis-killer: "Recent share price weakness on stocks relating to artificial intelligence (AI) data centres presents a compelling buying opportunity" [6].
- Australia pivot toward **renewable energy jobs** is being used to widen the orderbook funnel and improve overall margins [6].

### F. Earnings doubling potential
Management has guided that it "would not be surprised if net earnings double by FY27 (from FY24 levels)" — ahead of consensus. CLSA's PE-to-growth target of 23.3x July-2026 PE is anchored to its three-year net profit CAGR — implying further upside if FY27 earnings double materializes [4].

---

## 2. Downside Catalysts / Risks

### A. Execution risk in new markets
Gamuda's international expansion (Taiwan MRT, Australia public-infra + RE, UK PBSA/offices) creates **execution risk on construction projects in new markets** — cost overruns and delivery slippage on large fixed-price contracts are the biggest concerns [3]. Several Australian projects are mobilising in 1H 2026 (Marinus Link, Carmody's Hill, Sydney Metro West) — the next 12 months are the early-execution window where margin slippage typically surfaces [10].

### B. Margin pressure and earnings volatility
- The **1QFY25 result was a miss** (18%/17% of CLSA/consensus FY estimates) attributed to weaker margins despite strong top line — a reminder that growth is not yet margin-accretive [1].
- Half-year FY26 net profit rose only 5% YoY despite the large orderbook, with Australian contribution down due to near-completion of earlier projects — a transition gap before new mega-projects ramp [11].

### C. Balance sheet stretch
**Gearing has jumped to 68% from 53%** as the property division acquired landbanks in Vietnam and Singapore and ramped existing project capex [9]. This rising leverage during a heavy delivery period is a downside lever — funding-cost shocks, equity raise, or working-capital strain would re-price the stock.

### D. Vietnam property exposure
Property earnings are highly leveraged to Vietnam (Eaton Park, Celadon City, Hanoi Parcel A). **A slowing Vietnamese economy could dampen demand for property launches in Hanoi and Ho Chi Minh City** [3]. With property NP slightly declining post-Celadon completion and new QTPs in early stages, near-term property earnings could disappoint.

### E. Malaysian policy / political risk
Given job concentration in large public-infrastructure projects (Penang LRT, MRT3 replenishment, Sg. Rasau, hydropower), **Gamuda is exposed to policy risk in Malaysia** [3]. Specific watchpoints:
- **MRT3 civil works replenishment** is explicitly flagged by CLSA as a key item to monitor [3].
- Penang LRT Phase 2 + systems works tender (separate from civil) — Gamuda is considering tendering for systems works [8].
- Project re-pricing post-Value Management (Penang LRT was already cut from RM8.3bn to RM7.9bn) [15].

### F. AI-DC demand / chip-diffusion overhang
Even after CLSA's "DC slowdown fears overblown" thesis, the residual risks are: (i) slower-than-expected DC build pace if US chip-diffusion rules tighten further, (ii) competition pushing DC contractor margins lower as Malaysian players "fast catching up" with foreign contractors, and (iii) **water supply emerging as the biggest stumbling block** to further DC growth in Malaysia — one DC operator has resorted to wastewater treatment for cooling [7]. Slower DC pipeline means slower Gamuda DC contract conversion.

### G. Sabah Ulu Padas/PPA-execution risk
The integrated hydro/solar project's economics depend on PPA execution by 31 Dec 2026 [13]. Any further delays, change of state government priorities, or financing-term renegotiation would defer the RM450m/year revenue stream and dent the re-rating thesis.

---

## 3. Valuation Anchor & Key 12–18 Month Milestones to Monitor

CLSA's target is **RM11.00** based on 23.3x July-2026 PE (a PE-to-growth model anchored to Gamuda's three-year core net profit CAGR) [5]. Historical re-ratings have followed orderbook expansions of 3.7x (FY05–07) and 8.4x (FY15–16); the current 7x lift from FY21 base is consistent with that pattern [7].

**Key catalyst milestones (next 12–18 months)**:

| Window | Event | Direction |
|---|---|---|
| 2H 2026 | Penang LRT systems works tender outcome | Upside |
| 2H 2026 | Further MNC data centre contract awards | Upside |
| 2H 2026 | MRT3 replenishment progress | Upside / Downside |
| End-CY 2026 | Orderbook check vs RM45bn guidance | Upside if exceeded |
| 31 Dec 2026 | Ulu Padas PPA execution deadline | Upside / Downside |
| Through FY26–FY27 | Australia mega-project (Sydney Metro West, Marinus, GEA RE) execution margins | Downside risk |
| FY27 | Management's "earnings double from FY24" test | Upside if delivered |

---

**Sources**
[1] Gamuda - O-PF (Earnings miss on weaker margins) — CLSA (12 Dec 2024) — 607946624LinqAlpha.PDF
[2] Malaysia strategy (Opportunity in AI DC uncertainty) — CLSA (23 Jan 2025) — 607948926LinqAlpha.PDF
[3] Malaysia stock coverage (Transfer of coverage) — CLSA (2 Dec 2024) — 607945872LinqAlpha.PDF
[4] Gamuda - O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF
[5] Gamuda - O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF
[6] Gamuda - O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF
[7] Malaysia Strategy (Data centre channel check) — CLSA (6 Jun 2025) — 607961433LinqAlpha.PDF
[8] Malaysia strategy (Opportunity in AI DC uncertainty) — CLSA (23 Jan 2025) — 607948926LinqAlpha.PDF
[9]–[12] Gamuda Berhad — Quarterly Report on Consolidated Results, Period Ended 31 January 2026 (Q2 FY26 Interim Results)
[13] Gamuda Berhad — Announcement: Ulu Padas Hydroelectric Project Revised LoN, 5 May 2026
[14] Gamuda Berhad — Notice of Award: Kaohsiung MRT Xiaogang-Linyuan Line RLC02, 7 May 2026
[15]–[16] Gamuda Berhad — Quarterly Report on Consolidated Results, Period Ended 31 January 2026 (Q2 FY26 Interim Results)

## Citations

- [9] **Gamuda Financial Results Q2FY26** · external
- [10] **Gamuda Financial Results Q2FY26** · external
- [11] **Gamuda Financial Results Q2FY26** · external
- [12] **Gamuda Financial Results Q2FY26** · external
- [13] **Gamuda (LON_Ulu Padas Hydroelectric Project)** · external
- [14] **Gamuda (Notice of Award_Kaohsiung MRT)** · external
- [15] **Gamuda Financial Results Q2FY26** · external
- [16] **Gamuda Financial Results Q2FY26** · external

