---
endpoint: analytics
pattern: Infrastructure
status: done
latency_ms: 189888
conversation_id: 62c0f5fa-4bfa-454f-959e-87d215dc1b07
citations: 0
created: 2026-05-31 19:50:15Z
---

# Is CLSA incrementally more positive/negative on Gamuda. If so, why?

## Yes — CLSA is incrementally MORE POSITIVE on Gamuda

CLSA's rating on Gamuda (GAM MK) has been progressively upgraded through 2024–2025, culminating in its highest conviction tier. The rating sequence on the stock makes this explicit:

| Date | Rating | Target Price |
|---|---|---|
| 22 Jul 2024 | HLD | RM4.25 (adj.) |
| 04 Dec 2024 | O-PF | RM5.50 (adj.) |
| **23 Feb 2025** | **HC O-PF (High-Conviction Outperform)** | **RM5.50** |

The 23 February 2025 move to **High-Conviction Outperform** is the most recent rating action and remains the published view through CLSA's June 2025 notes [1]. HC O-PF was newly introduced by CLSA on 16 December 2024 as the top tier above regular O-PF, so the upgrade represents a step-up in conviction, not just a re-rating [1]. As of CLSA's 16-Jun-2025 SunCon report, Gamuda trades at RM4.80 vs the RM5.50 TP (~+15% upside) on 26.1x 2025 PE / 20.1x 2026 PE [6].

Gamuda is also a top pick in CLSA's Malaysia model portfolio at the firm's highest conviction (HC O-PF), with +17% implied upside (share price RM4.70 vs TP RM5.50, June 9 strategy note) [3].

---

### Why CLSA is incrementally more positive — the drivers

**1. Data-centre buildout has accelerated into a structural orderbook tailwind**

CLSA's 6-Jun-2025 data-centre channel check — based on meetings with two of Malaysia's largest co-location operators — confirmed a continued positive industry outlook and explicitly stated: *"We prefer contractors Gamuda and IJM Corp on the back of this buildout"* [2]. The note flagged Gamuda's announcement on **5 May 2025 of RM1.0bn enabling works for a data-centre client in Negeri Sembilan** as evidence that tender activity is converting into contracts [2].

This sits behind management's guidance — flagged in CLSA's note coverage — that **unbilled construction orderbook will reach RM40–45bn by end-CY2025, from ~RM30bn currently**, with the bulk of new wins coming from data-centre contracts.

**2. Premium valuation now defended by overseas wins, not just Malaysian cyclicals**

CLSA values Gamuda on a PE-to-growth basis, with the target derived from **23.3x July 2026 PE** — justified, in CLSA's words, by the fact that this is "similar to its three-year net profit Cagr" and that "the stock has traded at similar multiples in the past when its unbilled orderbook has shown multiple increases." Crucially, *"its newfound ability to win jobs overseas is another reason why we think a premium valuation (to peers and versus historical levels) is justified"* [5]. The catalyst pipeline now spans **Malaysia (data centres, public infrastructure, renewable energy), Taiwan (public infrastructure), and Australia (renewable energy, public infrastructure)** — explicitly geographically diversified rather than just a Malaysian construction cyclical [5].

**3. Earnings trajectory: management guidance running ahead of CLSA**

Per the most recent dedicated Gamuda note (12 December 2024), management said *"it would not be surprised if net earnings double by FY27 (from FY24 levels), which is ahead of our forecast"* — implying upside to CLSA's own estimates. The same note showed strong revenue momentum (+47% YoY) and management's commitment to the RM40–45bn orderbook target. Despite the 1QFY25 core net profit being a numerical "miss" at 18% of CLSA full-year, CLSA reaffirmed O-PF and the methodology shift to PE-to-growth — i.e., they looked through the print [1].

**4. Preferred over peers on relative value**

On 16 June 2025, CLSA **downgraded SunCon (SCGB MK) from HOLD to Underperform** on the explicit basis that *"2026 PE valuations are higher than peers Gamuda and IJM Corp"* and "this has been more than priced in" [7]. The peer comparison table in that note positions Gamuda at 26.1x 2025 / 20.1x 2026 PE vs SunCon at 26.2x / 25.9x — i.e., Gamuda offers materially better growth visibility (EPS growth +29.6% in 2026 vs SunCon +0.9%) at a comparable forward multiple [6].

**5. Investment thesis (verbatim from the June 16 note)**

> *"Historically an engineering leader in Malaysia, Gamuda has been able to make inroads into regional infrastructure projects using an industry leading digitalization investment. It has a strong management team that is recognised for its execution track record, which usually manifests in reasonably strong margins. Gamuda continues to be well positioned to ride Malaysia's wave of infrastructure spending."* [4]

---

### Caveats CLSA flags

- **Execution risk** on construction projects in new markets (Taiwan, Australia) [5]
- **Vietnam macro**: a slowing Vietnamese economy could dampen demand for Gamuda's property launches in Hanoi/HCMC [5]
- **Malaysian policy risk** given Gamuda's job concentration in large public-private partnership infrastructure projects [5]

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### Bottom line

CLSA's incremental shift is unambiguously **more positive**. The rating has moved HLD (Jul-2024) → O-PF (Dec-2024) → **HC O-PF (Feb-2025)** — i.e., upgraded into CLSA's highest conviction tier. The catalyst behind the rerating is the conversion of Malaysia's data-centre buildout into hard orderbook wins (RM1bn enabling works in May 2025; orderbook on track to RM40–45bn) [2], the company's ability to win overseas jobs justifying a premium multiple [5], and a relative-value preference vs SunCon, where CLSA has actively been *less* positive [7].

---

**Sources**
[1] SunCon - U-PF (Earnings up but downgrade to U-PF) — CLSA (16 Jun 2025) — Gamuda recommendation history table — 607962123LinqAlpha.PDF
[2] Malaysia Strategy (Data centre channel check) — CLSA (6 Jun 2025) — 607961433LinqAlpha.PDF
[3] Malaysia strategy (1Q25 results: outlook not as dire) — CLSA (9 Jun 2025) — Top picks comp sheet — 607961581LinqAlpha.PDF
[4] SunCon - U-PF — CLSA (16 Jun 2025) — Gamuda investment thesis — 607962123LinqAlpha.PDF
[5] SunCon - HLD (Upgrading earnings forecasts) — CLSA (11 Apr 2025) — Gamuda catalysts, valuation, and risks — 607955703LinqAlpha.PDF
[6] SunCon - U-PF — CLSA (16 Jun 2025) — Peer comp table (SunCon/Gamuda/IJM) — 607962123LinqAlpha.PDF
[7] SunCon - U-PF — CLSA (16 Jun 2025) — Rating-downgrade rationale referencing Gamuda — 607962123LinqAlpha.PDF

