Gamuda Bhd: A Strategic Move into the Data Centre Sector
Gamuda Bhd (KL:GAMUDA) has taken a significant step forward in its data centre strategy by securing a deal with Google-linked Pearl Computing Malaysia Sdn Bhd. This development has strengthened analysts’ confidence in Gamuda’s ability to win upcoming data centre projects, despite global tensions and AI policy shifts in the US.
Key Highlights: Gamuda’s Strategic Data Centre Moves
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Partnership with Pearl Computing Malaysia:
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Reinforces Gamuda’s strategy to target large-scale data centre projects.
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Positions Gamuda for upcoming Google-linked data centre developments at Elmina Business Park and Eco Business Park.
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Land Sale and Enabling Works at Springhill:
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Sale of 389 acres for RM455 million.
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RM1 billion in enabling works to be carried out on the site.
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Expected to increase Gamuda’s order book by 3% to RM37 billion.
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Capacity and Revenue Potential:
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The Springhill site can support data centres with capacities of 800 to 1,000 megawatts.
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Potential contracts from the site could range from RM14 billion to RM20 billion.
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If Gamuda secures half of these contracts, it could win RM3.5 billion to RM5 billion in annual data centre jobs.
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This exceeds the current forecast of RM3 billion for data centre projects.
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Why Gamuda’s Data Centre Strategy is Working
1. Full-Spectrum Solutions:
Gamuda has nine data centre teams and offers comprehensive solutions from land development to utility integration. This approach:
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Speeds Up Construction: Efficient planning and execution.
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Reduces Costs: Lower risk through integrated services.
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Enhances Market Appeal: Attractive to tech giants and infrastructure investors.
2. Resilience Against Global Disruptions:
Despite uncertainties from US AI policies, analysts remain optimistic about Gamuda’s strategy. Its focus on building critical infrastructure and renewable energy ensures long-term project viability.
Financial Impact: Positive Earnings Outlook
CIMB Securities’ Perspective:
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Gamuda is well-positioned to win upcoming data centre projects, particularly at Springhill Industrial Park.
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These contracts are expected to boost Gamuda’s earnings visibility and project pipeline.
Kenanga Research Analysis:
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While the land sale itself may not yield high profits, it positions Gamuda for future data centre projects.
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Earnings Projection: Each additional RM1 billion in contracts could increase Gamuda’s FY2026 earnings by 2.2%.
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Stock Target Price: Potential rise by seven sen to RM4.97.
Hong Leong Investment Bank Research:
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Highlights Gamuda’s focused data centre strategy as a key advantage.
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Emphasizes the strategic location of the Springhill site for attracting high-value contracts.
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Earthworks scheduled to complete by Q3 2025, keeping contracts on track.
Record-High Order Book: A Sign of Strength
According to MIDF Research, Gamuda’s order book has reached RM37 billion, a record high for the company. This includes RM15.5 billion worth of new projects secured in FY2025.
Major Projects in the Pipeline:
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Sabah Water Supply Project: Estimated at RM4 billion.
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Penang Light Rail Transit (LRT): Additional contracts worth RM3 billion.
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Additional Data Centre Projects: Potential to secure RM35 billion in the near future.
Analyst Sentiment:
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19 out of 21 research firms have given Gamuda a ‘buy’ rating.
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Average 12-month target price: RM5.39, indicating a 23.9% potential return.
Market Performance and Investment Outlook
Stock Performance:
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As of Tuesday’s noon break, Gamuda shares were down 0.68% to RM4.35.
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Year-to-date, the share price has decreased by 8.23%, despite positive news on project acquisitions.
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Market Capitalization: RM25.1 billion.
Why the Dip?
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Investors may be cautious due to global economic uncertainties and AI-related risks.
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Analysts, however, remain bullish due to Gamuda’s robust order book and strategic data centre focus.
Why Data Centres? Understanding Gamuda’s Strategic Pivot
1. Growing Demand:
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The increasing need for cloud storage, AI processing, and data management makes data centres lucrative.
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Global Tech Giants: Companies like Google are actively seeking secure, scalable data hosting solutions.
2. Resilient Revenue Streams:
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Data centres provide long-term contracts and recurring income, ideal for maintaining cash flow stability.
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Gamuda’s strategy of offering end-to-end solutions positions it well against competitors.
3. Alignment with Future Trends:
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With increasing digital transformation, the demand for reliable data infrastructure will continue to rise.
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Gamuda’s partnerships with tech giants enhance its visibility in this growing sector.
Conclusion: A Strategic Shift Towards Long-Term Growth
Gamuda Bhd’s data centre strategy, bolstered by the partnership with Pearl Computing Malaysia, positions it at the forefront of infrastructure development in the digital economy. The recent land sale at Springhill Industrial Park and potential future contracts indicate a robust growth trajectory.
Investment Takeaways:
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Buy Recommendation: Supported by analysts due to diversified project pipeline.
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High Growth Potential: Strategic focus on data centres and renewable energy.
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Solid Financials: Record-high order book of RM37 billion and strong earnings outlook.
Despite short-term share price fluctuations, Gamuda’s strategic focus on high-demand infrastructure projects makes it a compelling investment opportunity. Investors should consider the long-term gains from the data centre sector and the company’s expanding project portfolio.
Stay updated for more developments as Gamuda continues to secure key data centre projects and solidify its position as a leading infrastructure player in Malaysia.
