KUALA LUMPUR, Sept 9 — Gamuda Bhd’s share price fell 12 sen in early trade on Monday to RM7.41 following the news of the collapse of an embankment at the Rasau River Water Supply project in Selangor on Saturday.

The collapse of an embankment at the Rasau River Water Supply site has caused the river to overflow into the front of the project’s construction site in Taman Mas, Puchong.

However, investment analysts still maintained a “buy” call on Gamuda given that the company has recently secured a contract to develop the 187.5-megawatt (MW) Ulu Padas Hydroelectric Project (HEP) from the Energy Commission of Sabah.

The project will be developed by Upper Padas Power Sdn Bhd, a wholly-owned subsidiary of UPP Holdings Sdn Bhd, which is in turn a joint venture between Gamuda, Sabah Energy Corp Sdn Bhd and Kerjaya Kagum Hitech JV Sdn Bhd.

Maybank Investment Bank Bhd (Maybank IB), in a note, said it maintained a “buy” and upgraded the target price (TP) to RM8.00 from RM7.25 previously due to Gamuda’s involvement in the Padas HEP.

“We are positive on Gamuda’s involvement in the Upper Padas HEP based on its experience in dam and related infrastructure engineering and construction (E&C), alongside a 40-year public-private partnership that gives recurring earnings,” it said.

The Padas HEP costs RM4 billion, including interest cost during construction.

“We estimated the E&C value to be RM3.5 billion, of which at least RM2 billion is attributable to Gamuda, which would lift its outstanding E&C orderbook by more than eight per cent from RM24.2 billion as at April 2024,” it added.

Maybank IB also said that Gamuda will have two earnings sources — construction profits (2025-2030) and the recurring associated contribution (from 2031).

On the Rasau project, the bank said that initial assessment for the required remedial works indicates the overall project completion date (2025) is still intact.

This project was 15 per cent completed as at April 2024 with remaining works worth RM1.7 billion.

Meanwhile, CIMB Securities Sdn Bhd also retained a “buy” call on the counter, the firm anticipated that construction works for the Ulu Padas project could start by early-2025 ahead of its scheduled completion within six years from its commercial operation date (by Dec 31, 2030.)

“We estimate that Gamuda could reap up to RM5 billion worth of construction opportunities from the Ulu Padas project, for which the group would likely command a majority stake.

“Aside from the Ulu Padas dam’s construction, we believe that Gamuda is poised to secure additional scope of works related to a water supply scheme that will re-channel water released from the dam into the state’s water distribution system,” it said.

CIMB further said Gamuda’s orderbook could comfortably surpass RM30 billion by end-2024, without taking into account more job prospects coming its way from the data centre space.

“We maintain our buy recommendation on Gamuda with a TP of RM9.30,” it said.

Meanwhile, RHB Investment Bank Bhd also maintained a “buy” with a TP of RM9.68.

At 10.33 am, Gamuda fell to RM7.41 with 2.09 million shares transacted. — Bernama