KUALA LUMPUR: Shares of Gamuda Bhd (KL:GAMUDA) have the potential to rise as much as 62% from their last traded price if the company’s market value aligns with the size of its order book, CGS International said on Friday.
The research house estimates that Gamuda should be valued at RM8.10, compared to its last price of RM4.99. It noted that Gamuda’s market capitalisation is currently 0.7 times its order book, below the historical average of 1.1 times since 2010.
“We view its order book target as conservative given the pipeline of potential data centre projects with its bundled strategy,” CGS International said. “Given its strong project win momentum, we think the stock can trade up to RM8.10.”
For now, the firm has raised its target price to RM6.45, based on the sum of its individual businesses’ valuations, while maintaining an ‘add’ call on the stock.
Despite hitting a new record high earlier, Gamuda’s shares have retreated for three consecutive days. The stock has more than doubled in 2024, benefiting from a strong rally in the construction sector as investors seek exposure to companies involved in data centre developments and other industrial projects. At its last price, Gamuda’s market capitalisation stood at RM28 billion.
Analysts remain largely bullish on the stock, with 19 ‘buy’ calls, two ‘hold’ calls, and no ‘sell’ ratings. Bloomberg data shows a consensus average target price of RM5.47, implying a 10% upside over the next 12 months.
CGS International also highlighted that Gamuda’s own order book target of RM40 billion to RM45 billion for 2025 appears conservative, as its current order book stands at RM31.8 billion.
“We think the incremental order book upside, which investors are also not fully pricing in, will come from high-margin data centre projects on land recently acquired in Negeri Sembilan,” the research house said.
The 389-acre land in Negeri Sembilan alone could generate contracts worth RM19 billion over the next several years for a campus of eight to nine data centres, CGS International added.
