KUALA LUMPUR (Jan 24): A joint venture between Gamuda Bhd (KL:GAMUDA) and Ferrovial (GFJV) has inked an early contractor involvement (ECI) agreement with Capricornia Energy Hub (CEH) for a hydroelectric storage project in Queensland, Australia. CEH is backed by Copenhagen Infrastructure Partners, one of the world's largest clean energy investors.

Under the five-month ECI deal, whose contract value was not disclosed, Gamuda said in a statement that its JV will develop an engineering, procurement and construction framework for delivering the project, named Capricornia Pumped Hydroelectric Storage.

Located about 80km west of Mackay, the project is poised to play a pivotal role in bolstering Queensland's renewable energy ambitions, Gamuda said, and will supply affordable and reliable power to about 900,000 homes in the state. The project's energy storage system will feature a 750-megawatt pump and generation facility capable of continuously delivering power for 16 hours.

With a total storage capacity of 12 gigawatt-hours, the project will utilise an upper off-stream reservoir and a lower reservoir situated about 5km downstream from the existing Eungella Dam, Gamuda said.

"This landmark project underscores our commitment to Queensland’s renewable energy future while expanding our presence across Australia. We’re proud to be part of such a transformative initiative," said Gamuda Australia chief executive officer Ewan Yee.

Gamuda shares have fallen over 12% since the US government's announcement of new restrictions on artificial intelligence chip exports. The counter closed 10 sen or 2.33% lower at RM4.19 on Friday, giving it a market capitalisation of RM24.43 billion.

It is trading at 26.5 times its trailing price-earnings ratio (PER), compared with 28.9 times for Sunway Construction Group Bhd (KL:SUNCON) and 16.6 times for IJM Corp Bhd (KL:IJM), according to ASKEdge.

AmInvestment Bank, in a note on Friday, said Gamuda’s valuations are likely to face further corrections due to lingering negative sentiment from the overhang.

It also said the potential upside from the construction sector's re-rating thesis now seems limited, in the absence of a data centre catalyst. Consequently, it has revised its target PER for the construction segment, lowering it from 22 times to 16 times.

“This brings our revalued net asset value [RNAV]-based target price [for Gamuda] downwards to RM4.70/share [from RM5.70] which implies a PER of 20 times. We believe this is justified based on Gamuda’s growing orderbook size relative to its historical performance,” it added.

As of the first quarter ended Oct 31, 2024 (1QFY2025), data centre projects contributed RM2.5 billion or 8.3% of Gamuda's total order book.