---
endpoint: analytics
pattern: Infrastructure
status: done
latency_ms: 224617
conversation_id: 3bb852d6-38b6-43e7-bc77-ee62e568d57a
citations: 12
created: 2026-05-31 22:13:59Z
---

# How does Gamuda’s valuation compare to peers, and what justifies its premium/discount?

# Gamuda (GAM MK / 5398) — Valuation vs Peers and Premium Rationale

## Bottom line (CLSA view, Joe Liew)

Gamuda is rated **HC O-PF** (High Conviction Outperform) with a target price of **RM5.50** (post 1:1 bonus issue), pegged to a **23.3x July 2026 PE** that CLSA explicitly justifies as a "**PE-to-growth (PEG)**" valuation set equal to the company's 3-year net profit CAGR [5][6]. CLSA argues the resulting premium versus regional and domestic peers is warranted by (i) a 7x increase in unbilled construction orderbook over three years, (ii) an internationally-competitive franchise (Australia/Taiwan/Singapore wins), and (iii) digitalisation investments (Autodesk, Google Cloud partnership, AI Academy, autonomous TBM) [4][5]. Below that thesis lives a real **earnings-revision risk** that has begun to show up: consensus 2025 EPS for Gamuda has been revised down **-11.0%** since the start of the year — the largest cut among the top-15 FBMKLCI constituents [8].

---

## 1. The Peer Comp Tables (CLSA)

### 1a. Most recent 3-way Malaysian construction peer table (CLSA, 16 Jun 2025) [2]

| Name | Rec. | Sh. P (RM) | TP (RM) | Mkt Cap (US$m) | 2025 PE (x) | 2026 PE (x) | 2025 PB (x) | 2026 EV/EBITDA (x) | 2026 Div Yld (%) | 2026 EPS Growth (%) | 2026 ROE (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| **Gamuda** | **HC O-PF** | 4.80 | **5.50** | **6,486** | **26.1** | **20.1** | **1.9** | **15.9** | **2.9** | **29.6** | **10.5** |
| SunCon | U-PF | 6.10 | 4.90 | 1,869 | 26.2 | 25.9 | 7.7 | 18.5 | 2.1 | 0.9 | 27.8 |
| IJM | O-PF | 2.56 | 2.66 | 2,131 | 21.3 | 19.3 | 0.9 | 11.2 | 3.1 | 10.2 | 4.5 |

Key observations from this comp [2][10]:

- On **2025 PE**, the three local contractors cluster around 21–26x — Gamuda's 26.1x sits at the top of the Malaysian pack, slightly above SunCon (26.2x) and a clear premium to IJM (21.3x).
- On **2026 PE** (the year CLSA actually pegs the TP to for Gamuda), the picture flips: **Gamuda 20.1x is cheaper than SunCon 25.9x** and only modestly above IJM 19.3x. CLSA explicitly cites this in downgrading SunCon to U-PF: *"26x 26CL PE looks high relative to peers and flat earnings… Its 2026 PE valuation is higher than peers Gamuda and IJM Corp"* [2][10].
- On **growth**, Gamuda's 2026 EPS growth of **29.6%** dwarfs SunCon's 0.9% and IJM's 10.2%, which is the central PEG argument — at 20.1x 2026 PE on ~30% growth, Gamuda is the cheapest growth-adjusted name of the three.
- On **PB**, Gamuda (1.9x) sits between asset-heavy IJM (0.9x) and asset-light SunCon (6.7x 2026); its PB is consistent with a balanced asset/services hybrid model.

### 1b. Broader regional construction peer table (CLSA, 3 Dec 2024 upgrade note) [1]

| Company | Country | Mkt Cap (US$m) | 2025 PE (x) | 2026 PE (x) | 2025 PB (x) | 2025 ROE (%) | 2025 EPS Growth (%) |
|---|---|---|---|---|---|---|---|
| **Gamuda** | MY | 5,482 | **17.8** | **18.4** | **3.0** | **11.8** | **44.6** |
| IJM Corp | MY | 2,302 | 18.7 | 16.6 | 0.9 | 5.1 | (7.8) |
| YTL Corp | MY | 4,882 | 9.6 | 8.3 | 1.4 | 15.1 | 17.8 |
| Sunway Construction | MY | 1,265 | 21.6 | 20.5 | 5.8 | 28.5 | 55.1 |
| Daewoo E&C | KR | 1,061 | 3.9 | 3.7 | 0.3 | 8.7 | 20.5 |
| Doosan Enerbility | KR | 9,827 | 20.6 | 18.6 | 2.0 | 9.4 | 40.2 |
| GS E&C | KR | 1,078 | 4.5 | 4.0 | 0.3 | 6.9 | (2.2) |
| HDC Hyundai Devt | KR | 884 | 6.1 | 4.3 | 0.4 | 7.4 | 40.5 |
| Hyundai E&C | KR | 2,291 | 6.0 | 5.1 | 0.6 | 9.8 | 6.4 |
| Samsung E&A | KR | 2,351 | 5.5 | 5.3 | 1.0 | 18.2 | (15.6) |
| China State Construction | CH | 7,147 | 4.6 | 3.9 | 0.7 | 16.5 | 18.1 |
| **Avg (Domestic Malaysia)** |  |  | **16.9** | **15.9** | **2.8** | **15.1** | **27.4** |
| **Avg (International KR/CH)** |  |  | **7.3** | **6.4** | **0.8** | **11.0** | **15.4** |

The mid-2024 comparison shows the magnitude of Gamuda's regional premium even more starkly [1]:

- Gamuda's 2025 PE of 17.8x is **~2.4x the international peer average** (7.3x) and slightly above the Malaysian average (16.9x).
- Gamuda's 2025 PB of 3.0x is **~3.8x the international PB average** (0.8x).
- Gamuda's 2025 ROE of 11.8x is broadly in line with peers (international 11.0%, domestic 15.1%) — so the premium is not being purchased with a clearly superior return profile, but with an EPS-growth and orderbook-trajectory argument.

### 1c. Gamuda in CLSA's Malaysia top-picks comp (CLSA, 10 Jun 2025) [3]

Within CLSA's 10 Malaysia top picks, Gamuda is the **highest-PE name**:

| Top Pick | 2025 PE | 2026 PE | 2026 ROE | 2026 EPS Growth |
|---|---|---|---|---|
| **Gamuda** | **26.1** | **20.1** | **10.5** | **29.6** |
| YTL Power | 9.8 | 11.8 | 10.6 | (16.8) |
| Eco World | 15.1 | 13.4 | 8.1 | 12.0 |
| AMMB (bank) | 9.0 | 9.1 | 9.2 | (1.2) |
| CIMB (bank) | 9.4 | 8.8 | 11.2 | 6.8 |
| Hong Leong Bank | 9.4 | 9.1 | 11.0 | 3.2 |
| Gas Malaysia | 12.9 | 13.5 | 23.7 | (4.9) |
| Tenaga | 15.5 | 15.3 | 8.3 | 1.9 |
| MISC | 11.9 | 12.0 | 7.1 | (0.6) |
| Westports | 18.8 | 16.9 | 21.5 | 11.1 |

Read across this table, **Gamuda is the only top pick with >25% EPS growth in 2026CL**, which is what carries CLSA's PEG-anchored TP [3].

---

## 2. What Justifies the Premium — CLSA's Five-Part Argument

**(a) Orderbook trajectory drives historical re-ratings.** Unbilled construction orderbook has grown from **RM4.5bn (2021) to RM32bn currently**, projected to RM40bn by Jul 2026 — a roughly 7x rise. CLSA explicitly maps this to two prior re-rating episodes (3.7x FY05–07, 8.4x FY15–16) when Gamuda's PE re-rated in step with orderbook expansion: *"PE valuation have been at similar levels in the past when it has been backed by massive increases in orderbook"* [6]. On the 20-year PE chart, the current 19.7x reading is roughly +1 s.d. above the 14.6x mean (17.4x +1 s.d., 11.9x –1 s.d.) — historically a high but not extreme zone reached only during prior orderbook-led re-ratings [12].

**(b) International competitiveness.** Gamuda has secured >RM47bn of contracts since 2021 across **Singapore (Defu MRT RM1.45bn), Australia (Sydney Metro West RM6.5bn, Coffs Harbour Bypass RM4.1bn, M1 Motorway Extension RM3bn, Boulder Creek Windfarm RM0.7bn), Taiwan (Taoyuan Underground RM2.13bn, Xizhi Donghu MRT RM4.3bn, Kaohsiung Yellow Line RM3.5bn), and Penang LRT (RM10bn)** — i.e., a transition from a Malaysia-centric infrastructure name to a regional EPC franchise. CLSA argues this geographic diversification, plus differentiated execution capability, *"warrant a significant premium against regional and domestic peers"* [4][5][11].

**(c) Digitalisation moat.** The Group Digital Operating System (GDOS), AI Academy, GenAI deployment, autonomous TBM, plus partnerships with Autodesk and Google Cloud (with a DneX JV for Google Distributed Cloud services and a 20% RM18m stake in Cloud Space) are CLSA's "differentiators in winning/executing projects" — explicitly cited as a peer-premium justifier [4][11].

**(d) Data centre exposure as a near-term catalyst.** In the 6 Jun 2025 DC channel check, CLSA explicitly calls Gamuda *"attractive at 20x next FY PE (FYJul26CL) with potential for earnings to double over the next three financial years"* — i.e., on the **forward PE**, CLSA argues Gamuda is not actually expensive once you discount earnings out one year [7]. Recent DC wins include **RM1.0bn enabling works in Negeri Sembilan (announced 5 May 2025)** and CLSA notes orderbook replenishment is concentrated in DC contracts.

**(e) SOTP cross-check supports the PEG.** CLSA's revised RM5.50 TP (pre-bonus RM11) is corroborated by a SOTP that values Construction at 23.3x FY26 PE (RM22.57bn / 76%), Property at a 40%-discounted RNAV (RM5.73bn / 19%), Hydrodam DCF at 5.3% WACC (RM636m / 2%), and Water O&M DCF (RM645m / 2%) [9]. Construction's 23.3x PE valuation is the load-bearing element — almost all of the upside vs the prior SOTP (RM22.92bn → RM29.58bn) came from re-rating Construction's PE from 22x to 23.3x [9].

---

## 3. The Discount Side — What's Pushing Back

**(a) Earnings-revision pressure.** Bloomberg consensus 2025 EPS for Gamuda has been **revised down -11.0% YTD** — the **largest cut among the top-15 FBMKLCI constituents** (vs CelcomDigi -9.7%, MISC -6.8%, IHH -6.3%). CLSA's own FY25/FY26 net profit forecasts were cut 22% / 6% in the Dec 2024 upgrade note reflecting weaker construction margins [8].

**(b) 1QFY25 results miss.** The Dec 2024 follow-up flagged that 1QFY25 core net profit of RM199.8m was only **17–18% of the full-year estimates** despite +47% YoY revenue, driven by EBIT margin compression to 7.4% (vs 8.7% prior and CLSA's FY forecast of 9.9%) and weaker property (Celadon City maturation). Net result: -7.7% one-day / +5.2% three-day share-price reaction on the miss — modestly negative but more contained than the -2.3% one-day / -3.2% three-day average for "below-estimate" prints in 1Q25 [3].

**(c) Investor pushback.** CLSA explicitly says *"investors indicate that while there is very little pushback about Gamuda's orderbook growth, there is reluctance to buy the stock because of valuation concerns"* — i.e., the bull-bear debate is precisely whether the PEG framework justifies paying through-the-cycle highs [6].

**(d) Switch from SOTP to PEG.** Worth flagging that the PEG framework was **introduced in Dec 2024** to replace the prior SOTP construction multiple. The change is what justifies the higher TP, but it is also a framework change that lifts the multiple basis — investors should treat the PEG argument as conditional on the 3-year EPS CAGR (23.3%) actually materialising. If FY27E net profit ≠ RM1.68bn (32% growth), the PEG anchor breaks [5][9].

**(e) Risks per CLSA.** Execution risk in new geographies; Vietnamese economy slowing the property launches in Hanoi/HCMC; policy/concentration risk on large Malaysian projects [11].

---

## 4. Synthesis — Is the Premium Justified?

CLSA's own framing answers this conditionally:

- **Versus Malaysian peers on the relevant fiscal year (2026CL)**: Gamuda's 20.1x is **not expensive** — it's below SunCon's 25.9x and only ~80 bps above IJM's 19.3x. The premium-to-peers story is more a 2025-fiscal artifact (cyclical earnings trough) than a structural overpayment on the forward year [2].
- **Versus regional Korean/China peers**: Gamuda screens at **2.5–3x the PE/PB** of Korean construction peers like Daewoo, GS E&C, Hyundai E&C, and Samsung E&A. The premium here is harder to defend on pure multiples — it rests on (i) a more favorable government-spending tailwind in Malaysia, (ii) a digitalisation moat that Korean peers don't articulate, and (iii) better balance sheet and orderbook-replenishment visibility [1].
- **Versus its own history**: at 19.7x trailing PE (Dec 2024), Gamuda was trading at roughly **+1 s.d. (17.4x)** above the 20-year mean (14.6x) — high but consistent with prior orderbook-led re-rating episodes, not unprecedented [12].
- **The forward-PE argument is the strongest pillar**: at 20.1x 2026 PE on 29.6% 2026 EPS growth, the implied **PEG ≈ 0.7x** — that is the cleanest defence of the premium and the explicit core of CLSA's TP framework [3][5].

In short, CLSA's house view (Joe Liew, HC O-PF, RM5.50 TP) is that **the premium is justified by orderbook trajectory, internationalisation, and digitalisation — but the burden of proof now sits on the FY26–FY27 earnings doubling actually printing**, since consensus is already revising down 2025 EPS by double-digits and 1QFY25 missed on margin compression. A failure to hit the RM40–45bn orderbook by end-CY25 (from RM32bn currently) or further margin slippage would collapse the PEG support and reopen the gap to international peers.

---

**Sources**

[1] Gamuda — O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF — Construction peers comp table

[2] SunCon — U-PF (Earnings up but downgrade to U-PF) — CLSA (16 Jun 2025) — 607962123LinqAlpha.PDF — 3-way SunCon/Gamuda/IJM peer comp table

[3] Malaysia strategy (1Q25 results: outlook not as dire) — CLSA (10 Jun 2025) — 607961581LinqAlpha.PDF — Top-picks comp sheet

[4] Gamuda — O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF — Orderbook 7x, international wins, premium justification

[5] Gamuda — O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF — PEG valuation details and 22.3x/23.3x Jul-26 PE basis

[6] Gamuda — O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF — Historical rerating precedent and investor pushback

[7] Malaysia Strategy (Data centre channel check) — CLSA (9 Jun 2025) — 607961433LinqAlpha.PDF — "Gamuda attractive at 20x next FY PE"

[8] Malaysia strategy (1Q25 results: outlook not as dire) — CLSA (10 Jun 2025) — 607961581LinqAlpha.PDF — Gamuda 2025 EPS revised -11.0% YTD

[9] Gamuda — O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF — Revised SOTP table (RM29.58bn / TP RM11)

[10] SunCon — U-PF (Earnings up but downgrade to U-PF) — CLSA (16 Jun 2025) — 607962123LinqAlpha.PDF — Lift earnings but downgrade narrative

[11] SunCon — U-PF (Earnings up but downgrade to U-PF) — CLSA (16 Jun 2025) — 607962123LinqAlpha.PDF — Gamuda valuation details and catalysts

[12] Gamuda — O-PF (Continuing international wins) — CLSA (3 Dec 2024) — 607946020LinqAlpha.PDF — Gamuda 20-year PE chart (mean 14.6x, +1 s.d. 17.4x)

## Citations

- [1] **607946020LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607946020LinqAlpha.PDF>
- [2] **607962123LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962123LinqAlpha.PDF>
- [3] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [4] **607946020LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607946020LinqAlpha.PDF>
- [5] **607946020LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607946020LinqAlpha.PDF>
- [6] **607946020LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607946020LinqAlpha.PDF>
- [7] **607961433LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961433LinqAlpha.PDF>
- [8] **607961581LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961581LinqAlpha.PDF>
- [9] **607946020LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607946020LinqAlpha.PDF>
- [10] **607962123LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962123LinqAlpha.PDF>
- [11] **607962123LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962123LinqAlpha.PDF>
- [12] **607946020LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/11/607946020LinqAlpha.PDF>

