PETALING JAYA: Gamuda Bhd may announce a special dividend payout following associate Syarikat Pengeluar Air Selangor Sdn Bhd’s (Splash) acceptance of the latest takeover bid by the Selangor state government, analysts said. Gamuda has an indirect stake of 40% in Splash.
The Selangor government recently offered to take over Splash for RM2.975bil but retained the company as operations and maintenance (O&M) operator in the state.
With the acceptance of the third offer from the state government, the likelihood of a special dividend payout is high, according to HwangDBS Vickers Research.
“Assuming Gamuda pays out half of the RM632mil (in sales proceeds), investors stand to gain 16 sen per share, or a yield of 5%,” the research house told clients in a note.
“While a 5% special dividend may not appear exciting, the acceptance puts to rest concerns of the water consolidation in Selangor not materialising,” it said.
Going forward, HwangDBS expects the market to focus on the potential privatisation of 45%-owned associate Lingkaran Trans Kota Sdn Bhd as well as the upcoming awards of three mega projects that Gamuda is bidding for, such as portions of the Pahang-Selangor Water Transfer Project, light rail transit extension works and the building of a new low-cost carrier terminal at the KL International Airport.
Gamuda lost 20 sen, or 5.7%, to RM3 yesterday with 15.69 million shares traded.
OSK Research is also anticipating special dividends, and sees Gamuda retaining some of the cash proceeds for its Yenso Park development project in Vietnam.
It said in a research note that the Splash sale transaction could be completed in two quarters.
OSK said Gamuda’s share of RM632mil from the sale “will put Gamuda in a net cash position,” noting that the builder’s current borrowings were at RM472.4mil.
Kenanga Research said it believes that the added feature of an O&M contract had made Gamuda and other shareholders agree to the sale as it provides future recurring income, albeit at a much lower amount.
The Selangor government’s third offer of RM2.975bil comprises the assumption of RM1.396bil for liabilities and RM1.579bil for equity.
“We estimate the value of Splash to be about RM600mil which could translate to an extraordinary gain of RM30mil for Gamuda,” Kenanga said.
TA Securities said the takeover exercise would be detrimental to Gamuda’s earnings although its net gearing position would improve.
“We reckon the privatisation of Splash by the state government represents a loss of lucrative business to Gamuda,” it said in a note to clients.
TA said a special dividend payout may not happen as “we note that Gamuda would utilise the proceeds to fund its Yenso Park development, hence we are not expecting any dividend surprise for financial year ending July 31, 2010 and 2011.”
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