KUALA LUMPUR: Gamuda Bhd’s joint venture agreement (JVA) to operate the Upper Padas Hydroelectric Power Plant in Tenom, Sabah, is expected to generate two tiers of income: revenue of RM3 billion from the power plant construction and recurring income upon the commercialisation of the power plant.
Public Investment Bank Bhd in a note today said the JVA is between Gamuda (45 per cent stake), Sabah Energy Corporation Sdn Bhd (40 per cent), and Kerjaya Kagum Hitech JV Sdn Bhd (15 per cent).
“We opine that Gamuda would partake in the construction of the power plant (with a 50 per cent stake), bringing its construction order book to RM25.5 billion.
“Separately, details are still light for us to estimate the actual recurring income, but based on our assumptions, we estimate that it could contribute recurring income to the tune of RM42 million per year during the concession period,” it said.
Meanwhile, MIDF Research said that the project is only expected to generate meaningful contributions to Gamuda in 2025 as it is only slated to begin in the first half of 2024.
It added that the project will generate recurring income for Gamuda for at least 40 years when commercial operations begin in 2029.
“In terms of the order book, Gamuda should be able to add at least RM2 billion to its outstanding order book level, pending further details of the consortium that it will be part of.
“This would then bring the group’s unbilled order book level to about RM24 billion-RM26 billion, with strong earnings visibility up to the financial year 2027,” it said.
In a separate note, Hong Leong Investment Bank Bhd estimates that the construction phase will generate an average profit after tax of RM30 million yearly for Gamuda.
“However, once the plant commences operations possibly in 2029, it could generate a recurring annual income stream of RM70 million for Gamuda.
“This development could help ease volatility in Gamuda’s future earnings profile,” it added.-Bernama
