KUALA LUMPUR, Oct 23 — Gamuda Bhd’s shares surged this morning, rising by 2.46 per cent after securing a RM4.3 billion turnkey design and build contract for the Xizhi Donghu Mass Rapid Transit (MRT) project in Taiwan.

At 10 am, the stock jumped by 21 sen to RM8.75, with 5.76 million shares traded.

Gamuda, together with two Taiwanese-based companies, MiTAC Information Technology Corp and Dong Pi Co. Ltd, has been awarded the project by the Department of Rapid Transit Systems, an MRT division established under the New Taipei City Government.

In a note, Maybank Investment Bank Bhd (MaybankIB), said Gamuda’s latest RM3.2 billion engineering and construction win lifted its outstanding order book to RM28.7 billion, further strengthening its earnings visibility.

"This contract win is a positive surprise and comes with RM8.1 billion of additional works in about three years, sustaining the project’s work momentum for at least the next 10 years,” it said.

This win also brings Gamuda towards its RM30 billion job win target for the financial years 2025-2026 (FY2025-2026).

As such, MaybankIB reiterated a ‘buy’ call on Gamuda stock, raising the target price (TP) to RM9.60 from RM8.70 previously.

Meanwhile, Public Investment Bank Bhd (PIVB) said Gamuda’s unbilled order book has increased by 12.5 per cent.

"Assuming a pre-tax profit margin of 8.0 per cent and a corporate tax rate of 20 per cent in Taiwan, this project is expected to contribute about 2.1 per cent to net profit annually, based on certain levels of work completion each year over the project’s seven-year duration,” PIVB said.

It said the win underscores Gamuda’s strength in securing big projects in competitive international markets, thus PIVB retained an ‘outperform’ rating on Gamuda, with an unchanged TP of RM9.20.

HongLeong Investment Bank Bhd (HLIB), which maintained a ‘buy’ rating (TP: RM9.38) for Gamuda, expects the counter to undergo a contract upcycle in the coming months, leading up to its potential inclusion in the KLCI.

"We view the win as a substantial positive surprise given that Taiwan projects did not form part of its RM15 billion pipeline guidance (wins within the next two quarters) during its results briefing in September 2024.

"Taiwan’s healthy infrastructure initiatives and speedy tender process will translate to more upside risk potential, going forward,” it said. — Bernama