RAM Ratings reaffirms Gamuda’s AA3/Stable/P1 issue ratings

Published on 17 Mar 2023.

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RAM Ratings has reaffirmed the ratings of debt programmes under Gamuda Berhad (Gamuda or the Group) and its subsidiaries, Bandar Serai Development Sdn Bhd and Gamuda Land (T12) Sdn Bhd. The debt facilities of the subsidiaries are irrevocably and unconditionally guaranteed by the Group.

The reaffirmation of the ratings is supported by Gamuda’s better than expected performance and a resurgence in construction jobs. The Group’s RM14.80 bil construction order book and RM5.80 bil of unbilled property sales as at end-October 2022 (end-July 2021: RM4.55 bil and RM4.60 bil, respectively) provides robust earnings outlook for the medium term despite the loss of stable highway concession income. The construction order book is estimated to have ballooned to more than RM16 bil currently and is seen to expand further.

Gamuda enters a new growth phase, supported by a strong balance sheet. Total debts of RM5.01 bil and a cash balance of RM4.74 bil (including investment securities) as at end-October 2022 translate into an improved net gearing of 0.02 times (not including incorporated joint ventures) (end-July 2022 debts, cash and net gearing: RM4.79 bil, RM3.50 bil and 0.13 times, respectively). The Group’s substantial cash hoard will lessen the need for new debts. Balance sheet strength over the next three years is anticipated to be adequate, with gearing and net gearing rising to about 0.6 times and 0.5 times, respectively. Funds from operations net debt coverage is expected to weaken to about 0.20 times from 0.48 times in fiscal 2022. These ratios approximate pre-pandemic levels. 

Fast-paced expansion into multiple countries, particularly maiden and large construction projects in Australia, heighten Gamuda’s execution risks. To minimise these risks, the Group transferred key management and a substantial number of technical staff to the country well before securing its first contract. Given its focus on large-scale infrastructure jobs, Gamuda is susceptible to earnings volatility stemming from a lumpy order book.


Analytical contacts
Ben Inn
(603) 3385 2510

Thong Mun Wai
(603) 3385 2522


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

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Published by RAM Rating Services Berhad
© Copyright 2023 by RAM Rating Services Berhad

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Ratings on Gamuda Berhad