GAMUDA: Bullish Momentum Gains Steam After RM4.2 Billion Contract Win

This post is only available for Substack subscriber.

Overall Technical Verdict:

• Bullish Setup: The price is in a clear uptrend, supported by rising moving averages and expanding Bollinger Bands.

• Moderate Risk of Pullback: Given that the price is near the upper Bollinger Band and MACD is not extremely strong yet, a pullback or consolidation may occur before further continuation.

Company Background:

Gamuda is a Malaysian engineering, construction, and infrastructure group. It specializes in large-scale projects, including highways, railways, and water infrastructure. The company also engages in property development, delivering sustainable urban communities in Malaysia and internationally.

Themes on the Stock:

1. Infrastructure Development: As a major player in Malaysia’s construction industry, Gamuda is involved in large infrastructure projects such as highways, rail systems (MRT), and water systems.

2. Sustainability & Green Initiatives: Gamuda is focusing on sustainability, including green building certifications and renewable energy projects, aligning with global ESG (Environmental, Social, Governance) trends.

3. Property Development: Gamuda is involved in developing integrated townships and sustainable urban communities, both domestically and internationally.

4. Government Projects & Spending: Gamuda benefits from public sector infrastructure spending, particularly through government-backed projects in Malaysia and international markets.

5. Regional Expansion: The company is actively seeking to expand its presence outside Malaysia, particularly in countries like Australia, Taiwan, and Singapore, tapping into international infrastructure growth.

These themes make Gamuda attractive to investors focused on infrastructure growth, sustainability, and long-term urban development.

Details of Technical Analysis on GAMUDA:

1. Price Trend & Moving Averages (MA):

   • 50-Day MA (7.09) and 150-Day MA (5.81) show the stock has been in a long-term uptrend. The price is significantly above these moving averages, which is a bullish signal.

   • 200-Day MA (5.50) is trending upwards, another positive sign.

   • Short-term 20-Day MA (7.84) is rising, indicating that momentum continues.

2. Bollinger Bands:

   • The stock price is moving near the upper range of the Bollinger Bands (8.48 - 7.20), indicating that the price may be overbought in the short term. The bands are expanding, which suggests increasing volatility.

   • This can be a sign of potential continuation but also carries the risk of pullback or consolidation.

3. RSI (Relative Strength Index):

   • Current RSI is 73 which is slightly overbought. However, some stock can stay overbought for an extended period if the growth prospect remains intact.

4. MACD (Moving Average Convergence Divergence):

   • MACD shows slight positive divergence (0.08) with the signal line (0.12), indicating that the price momentum is turning slightly bullish. The histogram bars are moving from negative to positive, reinforcing this potential.

   • However, the strength is still moderate and could turn either way.

5. Volume:

   • The chart shows high volume spikes during upward price movements, which is a strong bullish signal, confirming that buyers are supporting the price increases.

Latest News On Gamuda on 22-October:

Major Contract Win in Taiwan: A consortium led by Gamuda has secured a substantial contract worth approximately $995 million for the construction of a rapid transit system in Taiwan. This project is a critical infrastructure development, aiming to enhance public transportation in the region. (Source of news CNA News On GAMUDA)