Kenanga maintains ‘outperform’ on Gamuda

KUALA LUMPUR: Kenanga Research has maintained its “outperform” call on Gamuda Bhd, with a lower target price of RM4.30, following news that the company’s 40 per cent-owned associate Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) had accepted the takeover offer from Pengurusan Air Selangor Sdn Bhd (Air Selangor) for RM2.55 billion.

The research house yesterday said it lowered the target price to RM4.30 from RM4.35 after factoring in the lower-than-expected offer price into its valuation.

“We believe that after the resolution of the water saga in Selangor, Gamuda will be able to move on and focus on future projects like the Penang Transport Master Plan and the Mass Rapid Transit Line 3,” it said.

Kenanga said on Monday the RM2.55 billion offer from Air Selangor was a 26 per cent discount of the company’s RM3.5 billion net book value as of December last year — a sweet deal for the Selangor government.

It pointed out that the offer was higher than the RM250.6 million made in 2014.

Kenanga said it did not expect any special dividend from the proceeds of the disposal, as it believed Gamuda might use it to pare down debts, bringing down its net gearing from 0.55 times to 0.42 times.

“Its outstanding order book comfortably stands at RM6.4 billion with a three-year visibility.

As for its property division, the company saw RM1.9 billion in sales in the first half of this year, bringing its unbilled sales to RM2.4 billion, with a three-year visibility,” it said.

Gamuda’s shares slipped to RM3.69 yesterday from Thursday’s close of RM3.71.