‘Downtrend in Splash-linked stocks only temporary’

Shares expected to rebound upon completion of Splash takeover

THE downturn in shares of companies linked to Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) is expected to be shortlived.

Analysts are optimistic that Gamuda Bhd and Kumpulan Perangsang Selangor Bhd (KPS) will bounce back upon completion of the RM2.55 billion Splash takeover by state-owned Pengurusan Air Selangor Sdn Bhd.

Gamuda and KPS own 40 per cent and 30 per cent of Splash, respectively.

Gamuda edged up 1.07 per cent, or four sen, to RM3.76 yesterday to reverse the 4.12 per cent, or 16 sen loss, on Monday.

Meanwhile, KPS rose 2.23 per cent to RM1.83 after having lost 5.79 per cent, or 11 sen on Monday.

Stock market analyst Nazarry Rosli said it was only a sentiment in play when the stock prices fell following the deal announcement.

“The shares will go up again to reflect the fundamentals,” he said.

KPS, for example, had previously been on the rise until the news came, said Nazarry, suggesting that the fall was only a brief hiccup.

“From the technical perspective, the shares have been trading above their 50 and 200-day simple moving average. This implies that the stock prices will continue their uptrend again anytime soon,” he said.

Meanwhile, BIMB Securities Research maintained a “buy” call on Gamuda, with 16.9 per cent upside potential from its share price of RM3.72 on Monday.

This was despite the negative response by the market on the takeover deal.

It said the Splash deal removed overhang on the stock while unlocking the concession value upfront.

“Still, we believe the fundamentals remain intact. Its current construction order book worth RM6.5 billion and unbilled property sales worth RM2.2 billion provide earnings visibility up to 2022,” said BIMB Securities.

Currently, Gamuda has eight “buy”, 12 “neutrals” and only four “sells” calls from analysts with consensus target price of RM3.88, higher than current trading price.