KUALA LUMPUR (March 27): Analysts have trimmed their forecasts for Gamuda Bhd (KL:GAMUDA) after weaker-than-expected earnings for the first half ended Jan 31, 2025 (1HFY2025).

Gamuda’s adjusted net profit for 1HFY2025 stood at RM410.9 million, accounting for only 35% of the consensus estimate and 33.2% of TA Securities’ projection, according to the research house in a note on Thursday. 

The weaker performance was primarily attributed to lower margins in the property segment, as newer Vietnamese projects remained in early development phases, along with margin compression in the construction division.

Following the earnings miss, at least two research houses have revised their earnings forecasts downward.

TA Securities lowered its projections by 18.7% for FY2025, down 13.0% for FY2026, and 5.8% lower for FY2027.

The house added that Gamuda is targeting an order book of RM40 billion to RM45 billion by year end, backed by a strong pipeline of projects in Malaysia, Australia, and Taiwan spanning water, data centres, renewables, and infrastructure. 

Meanwhile,  Philip Capital noted that Gamuda is actively bidding for RM35 billion worth of new jobs, including the RM4 billion Ulu Padas water treatment plant project in Sabah, RM5 billion in expansion works for a major data centre client, and an additional RM3 billion in work packages for Taiwan’s Xizhi Donghu Mass Rapid Transit (MRT) project. 

The company is also tendering for RM1 billion worth of data centre enabling works for a Negeri Sembilan land parcel, as well as infrastructure and renewable energy projects in Australia worth RM16 billion.

Philip Capital cut its FY25 earnings estimate by 12% to account for weaker property margin, while keeping its FY26-27E forecast unchanged as it expect margins to recover with improved progress billing. 

"We expect Gamuda’s outstanding order book of RM36 billion and unbilled property sales of RM7.2 billion to drive earnings growth in FY2025-FY2026," the house stated in a separate note. 

Shares of Gamuda have declined more than 12% year-to-date, impacted by broader market sell-offs, particularly as the company is perceived as a proxy for data centre-related stocks.

Analysts remain broadly positive on Gamuda, with 19 out of 21 analysts covering the stock assigning a ‘buy’ recommendation, while the remaining two have a ‘hold’ call, Bloomberg data showed. The stock's 12-month target price stands at RM5.37, implying a potential upside of nearly 30% from its last traded price of RM4.14 as of 10am on Thursday.

The consensus overview indicates that Gamuda is likely to breach RM1 billion in net profit for FY2025, on the back of RM15.96 billion in revenue, before accelerating to RM1.3 billion in FY2026, supported by RM18.64 billion in revenue. The last time the company’s net profit surpassed the RM1 billion threshold was in FY2023.

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