The construction group tumbled 32 sen to hit an intraday low of RM7.09 in morning trading. At the time of writing, the counter had clawed back much of its losses to trade at RM7.32, down nine sen or 1.2%, valuing the group at RM20.7 billion.
Gamuda is the contractor for the RM1.96 billion construction project, to develop a water treatment plant for Pengurusan Air Selangor Sdn Bhd. It could not be ascertained if the incident will delay the project’s expected completion in June 2025.
However, Gamuda may have dodged a bullet from the impact of the embankment collapse, which inundated the construction site with water from an adjoining pond.
In a stroke of good timing, Gamuda announced last Friday it had bagged a RM4 billion hydroelectric project in Sabah. This may have mitigated the fallout of the embankment collapse on its shares.
In a bourse filing, the group said its 45%-owned Upper Padas Power Sdn Bhd received a letter of notification from the Sabah regulator for the development of the 187.5MW Ulu Padas hydroelectric project.
Various research houses have maintained their “buy” calls on Gamuda on the back of this news and despite the problems arising from the embankment collapse.
In a note today, MIDF Research said Gamuda had guided that the project’s completion date by June 2025 is “still intact” after an initial assessment of the required remedial works.
MIDF, which raised its target price (TP) to RM8.26 from RM7.50, noted the completion progress was 28% as at July 2024.
Meanwhile, Maybank Investment Bank (Maybank IB) said the affected area is the ancillary site, namely the intake structure, and not the main site.
“We do however think this unfortunate incident could impact work progress, at least in FY2025, although Gamuda may catch up on the overall project timing subsequently, perhaps in FY2026,” it said.
It estimates a one-month no-work progress on the project will negatively impact its FY2025 net profit estimate for Gamuda by 0.4%. It also said there will be costs relating to remedial works.
Nevertheless, Maybank IB has kept its “buy” call and upgraded its TP to RM8 from RM7.25 due to Gamuda’s involvement in the Ulu Padas project.
“We estimate the engineering and construction value to be RM3.5 billion, of which at least RM2 billion is attributable to Gamuda,” it added.