KUALA LUMPUR (Feb 6): The Sungai Perak Raw Water Transfer Scheme (SPRWTS) project could potentially bump up Gamuda Bhd's (KL:GAMUDA) outstanding order book by about 11% to RM41.1 billion, positioning Gamuda as a rising player in Malaysia’s water infrastructure sector, analysts said.

In a note on Thursday, CIMB Securities pointed out that Gamuda could become a primary beneficiary of the SPRWTS, a key initiative under Budget 2025 aimed at bolstering water resources in the northern states of Peninsular Malaysia.    

The SPRWTS is expected to involve substantial capital expenditures, with estimates suggesting a project value of up to RM4 billion.   

The expansion of this infrastructure to include the neighbouring state of Penang aligns with the long-term objectives of the Penang Water Supply Initiative 2050, which aims to secure additional water resources for the fast-growing Seberang Perai region. 

The research house's previous updates have noted Gamuda's expertise in managing large-scale bulk water transfer and flood control projects, which would make it a strong contender to oversee the construction of this major project.  

CIMB anticipates that Gamuda and the Perak government’s water authority, Lembaga Air Perak, will finalise their exclusive agreement by the end of 2025, with construction expected to commence in 2026. 

CIMB maintained its 'buy' call on Gamuda, setting a target price of RM6.

In a separate note, RHB Research sees Gamuda emerging as an essential player in water infrastructure development, highlighting the company’s strong track record and capacity to manage complex projects. Further, the house expects minimal execution risks for Gamuda, due to the company's proven ability to manage high-value water projects.

Gamuda’s experience in undertaking large-scale water supply initiatives, including its involvement in Phase 3 of the Sungai Selangor Water Supply Scheme and its work on the Stormwater Management and Road Tunnel (SMART), positions it strategically for future contracts, RHB said. 

The house said that these ongoing projects, worth a combined RM6 billion, had cemented Gamuda's reputation for delivering reliable and effective water-related infrastructure.  

The latest project is expected to be another feather in Gamuda’s cap, as the company continues to gain prominence in the water infrastructure space.  

Additionally, the Stage 2 development of the Sungai Rasau Water Supply Scheme, valued at RM2 billion, represents another significant potential project for the company, RHB noted.

It said Gamuda’s involvement in large-scale flood management initiatives further bolsters its position as a key contender for the Selangor government's proposed underground tunnel system, designed to manage rain overflows and mitigate flooding risks in Kuala Lumpur. 

RHB also maintained its 'buy' call on Gamuda, with a target price of RM5.83. 

To recap, Gamuda entered into an exclusive agreement with the Perak government on Wednesday to develop critical infrastructure aimed at alleviating water shortages in the northern region of the state. 

The construction firm confirmed its partnership with Perbadanan Kemajuan Negeri Perak (PKNPk) to enable the transfer of raw water from Sungai Perak to Bukit Merah, and to establish the necessary infrastructure for the distribution of treated water, thereby ensuring a sustainable long-term water supply. 

The agreement paves the way for an official joint venture, which will be formalised in due course. 

As part of the agreement, both parties will collaboratively manage all facets of the water infrastructure project, including the design, civil and structural engineering, utility systems, risk management, as well as the implementation of local workforce development and technology training initiatives.  

At the time of writing on Thursday, Gamuda shares were up four sen or 0.9% at RM4.42, valuing the company at RM25.21 billion. 

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Gamuda signs exclusive agreement with Perak state agency to develop water infrastructure