Gamuda’s SMART 2 project could reach orderbook target of RM20b

The system combines river improvement works for the Klang River and a robust pumping system 

by ANIS HAZIM / Pic Source: gamuda.com.my

MAYBANK Investment Bank (Maybank IB) expects that Gamuda Bhd’s proposal for a SMART 2 flood mitigation system in western Klang Valley would further uplift its engineering and construction profile and achieve closer to its RM20 billion orderbook target by mid-2023. 

Maybank IB’s analyst Wong Chew Hann believes that the proposal would provide a winning resolution to the government and population there once it materialises. 

According to Wong, Gamuda proposed a “sponge city” flood mitigation system, involving 22km of tunnels to resolve the frequent floods in Shah Alam and Klang, Selangor, as reported by The Star. 

“The system combines river improvement works for the Klang River and a robust pumping system. But, it will not have a road system,” Wong said in a recent note. 

Notably, SMART 2 will be designed to absorb rainwater and surface run-off through interception and filtration, storing a large volume of water underground and releasing it later to the sea. 

“The system will cover five flood-prone areas — Taman Sri Muda, Shah Alam, Setia Alam, Klang Town and Taman Sentosa 

(including Bandar Puteri),” he said. Concurrently, the proposal has been presented to the prime minister and will be implemented over two phases to provide progressive flood mitigation relief while Gamuda is shovel-ready to start construction.

“The project will be funded by the private sector initially under the public private partnership (PPP 3.0) model, thus, alleviating the immediate fiscal strain on the government,” he added.

Overall, he views the proposal as hardly surprising as Gamuda is known for its innovativeness and has risen to the occasion over the past two decades with Sungai Selangor Water Treatment Plant Phase 3 and SMART 1. 

“From the government’s end, there is an urgency to address the flood problem in western Klang Valley — the Cabinet has recently raised the allocation for flood mitigation projects nationwide to RM15 billion for 2023 until 2030, from RM1 billion under the 12th Malaysia Plan,” he said. 

Maybank IB has recommended a ‘Buy’ on Gamuda with an unchanged target price of RM4.28.