RHB said it recently visited Gamuda’s industrial building system (IBS) plant located in Banting and came away feeling upbeat on the prospects the group has for its IBS products. The house views its IBS capabilities may position the group to capture data centre opportunities within the Klang Valley with Tenaga Nasional’s Green Lane Pathway, facilitating a smoother and faster setup of data centres in the country.
Gamuda has two IBS plants – one located in Banting and the other in Sepang with a total maximum combined production capacity of c.10,000 residential units per year. Efficiency wise, the IBS capabilities enable the reduction in construction period by c.50% and c. 20% for high rise and landed buildings.
According to the Construction Industry Development Board (CIDB), AIMS Data Centre awarded Gamuda with a MYR170m job to construct a data centre in Cyberjaya in Feb 2023 with a completion target by end CY23. While no exact details were mentioned by CIDB, RHB said it believes that the data centre could be the 8MW AIMS Cyberjaya Block 2 data centre whereby Gamuda utilised its “Next-Gen Digital Industrialised Building System (IBS)” solutions. Profitability wise, such projects could fetch PBT margin ranging between 10-12%. Given that IBS jobs mostly revolve around the group’s residential jobs plus the data centre – the house estimate pre-cast orderbook to be c.MYR300m as of end FY23. Although IBS job orders are modest (at only 1.5% of the orderbook at end-FY23), the house learnt that Gamuda is currently eyeing some data centre jobs within the Klang Valley. In the event data centre jobs become more sizeable, we believe the group can fully utilise both factories to accommodate these orders.
RHB said there is no changes to earnings estimates but takes the opportunity to raise target P/E to 15x (from 14x) for the Malaysia construction arm in light of potential prospects from data centres. It is also lowering discount to RNAV to 50% (from 60%) for GAM’s property segment considering the Johor Bahru-Singapore Rapid Transit System Link and the potential JB Light Rail Transit that may provide good visibility for Horizon Hills (GDV: MYR2.2bn) in Iskandar Puteri amid improvement in cross border traffic.
As a result, the house derives a new TP of MYR6.46 (from MYR5.66) which bakes in a 6% ESG premium based on a revised ESG score of 3.3 (from 3.2) as GAM’s IBS plants use green cement and are equipped with the concrete recycling system (<1% construction wastage).
