This article first appeared in The Edge Malaysia Weekly on September 16, 2024 - September 22, 2024

Gamuda Bhd (KL:GAMUDA) is no stranger to The Edge Billion Ringgit Club (BRC) Awards, having taken home eight awards in the construction sector and best corporate responsibility (CR) initiatives category over the years since its first win in 2013.

The tally rose to 12 this year, with Gamuda taking home four BRC awards, including the coveted Company of the Year award for 2024. It also secured the BRC awards for highest growth in profit after tax over three years in the construction sector as well as the BRC big cap category and its third trophy for best CR initiatives.

With 12 BRC trophies in hand, Gamuda is a cut above the rest. This is a testament to the hard work that the group, led by managing director Datuk Lin Yun Ling, has put in over the years, especially in securing contracts overseas.

In his statement to the group’s shareholders in Gamuda’s 2023 annual report, he noted that the company’s regionalisation strategy has borne fruit, with the group marking its second consecutive record-breaking year.

“Even against a backdrop of muted national economic growth, a notable lack of large infrastructure projects locally, elevated interest rates and geopolitical concerns, including the Russia-Ukraine War and flare ups in the Middle East, the group has demonstrated robust outcomes. This is evident with another year of record-breaking numbers in our construction order book, property sales, revenue, earnings and market capitalisation,” said Lin.

During the BRC awards evaluation period, Gamuda’s net profit increased by a three-year risk-weighted compound annual growth rate (CAGR) of 87.1%, having grown from RM376.5 million in FY2020 to RM1.84 billion in FY2023.

Overseas contracts contributed to the 41% jump in revenue to RM9.1 billion in FY2023, with overseas revenue doubling to RM4.6 billion during the year. This fourfold increase in revenue was due to the significant pickup in work progress at its projects in Australia and Taiwan.

Gamuda’s early overseas ventures gave the group room to grow its expertise and broaden its experience in civil construction. Take its venture in Taiwan. When the group entered the market in 2002, it started with a 50:50 joint venture (JV) with New Asia Construction & Development Corp.

Then in 2022, its 60:40 JV with Asia World Engineering & Construction (AWEC) secured a US$451 million contract for the underground alignment and commuter station in Pingzhen District, Taoyuan City. This grew to an 88% stake in another JV with AWEC in October 2023, which secured the contract to construct a 4.4km railway track in Niaosong District, Kaohsiung. This time, Gamuda was the lead contractor of the project.

The latest contract secured in Taiwan, worth NT$23.4 billion (RM3.45 billion), is the largest contract that Gamuda has secured since it entered the market in 2002.

Its expertise in the construction of civil infrastructure, especially underground tunnelling, was noticed even in Australia. Contracts in the Land Down Under made up 43% of its outstanding order book of RM25 billion in July 2024.

The group’s growth in Australia is further supported by DT Infrastructure Pty Ltd’s (DTI) acquisition of a transport project from Downer EDI Works Pty Ltd and VEC Civil Engineering Pty Ltd in early 2023, which came with a projected work in hand of A$2 billion across the continent.

In July, the JV comprising DTI and Alstom Transport Australia Pty Ltd was awarded a A$1.6 billion (RM5 billion) contract for the Metronet high-capacity signalling project by the Public Transport Authority of Western Australia.

“[The] acquisition of DTI is bearing fruit as Gamuda does not have the expertise in system works, and it broadens Gamuda’s positioning in the construction value chain,” CGS International said in a July 18 report.

Gamuda’s expansion into overseas markets has allowed it to weather domestic downturns better. If construction jobs dry up whenever the Malaysian government tightens its fiscal belt, it can still bank on its overseas markets to replenish its contract order book.

According to Gamuda, the projects in Australia contributed 60% to its divisional revenue and one-quarter to its divisional earnings in FY2023. They have also fuelled the rapid growth of its outstanding order book.

In March 2021, Gamuda’s outstanding order book stood at only RM5.5 billion. This means it had secured more than RM20 billion worth of contracts in slightly more than three years.

In fact, Gamuda is guiding for an outstanding order book of RM30 billion for calendar year 2024. This is not a tall order from its current outstanding order book of RM25 billion.

This is not to say that Gamuda hasn’t done well locally. The first phase of the Penang LRT (Mutiara Line) from Silicon Island to Komtar is already in the bag as its 60%-owned subsidiary SRS Consortium Sdn Bhd is the project delivery partner (PDP) for the Penang Transport Master Plan (PTMP).

The Penang LRT is part of the PTMP, along with several roads and highways, and the reclamation of the 2,300-acre Silicon Island. Gamuda’s subsidiary SRS TC Sdn Bhd is the turnkey contractor for Silicon Island as well as the Pan Island Link Phase 2A. The turnkey contract worth RM3.72 billion was awarded to SRS TC by project developer Silicon Island Development Sdn Bhd in June 2023. Gamuda owns 70% of Silicon Island Development through SRS PD Sdn Bhd.

The federal government allocated RM10 billion for the construction of the Penang LRT under Budget 2024.

In Sabah, Gamuda is developing a 187.5mw hydroelectric power plant in Tenom, together with Sabah Energy Corp Sdn Bhd and Kerjaya Kagum Hitech JV Sdn Bhd. The hydroelectric power plant, called the Upper Padas hydroelectric plant, is estimated to cost 

RM4 billion. The plant is expected to commence operations in 2029 and run for 40 years. It is expected to contribute to Gamuda’s earnings for the next 45 years.

In Australia, Gamuda is in the running to secure four projects, with the most promising being the Suburban Rail Loop in Melbourne, the contract for which is expected to be awarded next month. In New South Wales, the tender for the stations package of the Sydney Metro West is expected to be put out soon.

Gamuda also excels in property development, with sales of more than RM4 billion and unbilled sales of RM6.7 billion in FY2023. The group’s total land bank stood at 2,433 acres, with a potential gross development value of RM62 billion.

The group aims to double its annual property sales in five years using a two-pronged strategy, focusing on its Quick Turnaround Projects (QTP) and township developments.

The purchase of properties in London such as Winchester House, which houses the London headquarters of Deutsche Bank AG, is part of its QTP strategic plan. “Located in the heart of London’s financial business and commerce centre, Winchester House will comprise Grade A ESG office space, and we have been encouraged by the level of interest from potential co-investors and lessees thus far,” Lin said in the 2023 annual report.

In Vietnam, the group acquired a 9.1-acre site in Thu Duc City, Ho Chi Minh City, for a mixed-use development. It envisages an exit time frame of three to five years for this project.

Gamuda has established a strong presence in the Vietnamese property market over the past two decades, developing projects such as Gamuda City in Hanoi, Celadon City and Elysian in Ho Chi Minh City and Artisan Park in Binh Duong.

The group expects to sell RM5.6 billion worth of properties this year with its revenue reaching RM6 billion. This is based on locked-in unbilled sales, together with faster-than-expected sales and construction of QTPs, with 50% of the targeted revenue coming from sales orders in hand in Vietnam, the UK, Australia and Singapore that had yet to be recognised in FY2023.

“We expect significant revenue to be recognised in FY2024, subject to the completion of the QTPs. Vietnam contributed 68% to QTP pre-sales with strong take-up rates of 70% for Artisan Park and 84% for Elysian Phase 1, both of which are expected to be fully sold in 2024 and 2025 respectively,” said Lin.

“The West Hampstead QTP project in London, which currently has a take-up rate of 70%, is expected to be fully sold in 2024. Gardens Park, a new township development adjacent to Gamuda Gardens in Rawang, Selangor, is expected to be launched in FY2024.”

The future looks bright for Gamuda as it continues to play a significant role in the country’s infrastructure development. From highways and rail to data centres and hydroelectric power plants, the group has proved why it is among the best companies in Malaysia.

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