Gamuda: Splash worth at least RM2.8bil

PETALING JAYA: Gamuda Bhd’s 40%-owned Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) should be sold at least at its book value of RM2.8bil as at end-November, said its group managing director Datuk Lin Yun Ling.

Speaking to reporters after the company’s AGM and EGM, Lin said: “We don’t want to divest at a loss.”

In February, the Selangor state government made a net offer of RM250.6mil to buy out Gamuda’s equity stake in Splash.

He said the one time book value consideration was premised on the past deals in the consolidation of the water sector in six other states, which were done at a minimum of one time book value.

“There is no conceivable reason why Splash shareholders should not be allowed to exit on the same ‘no gain, no loss’ principle as practised in the past.”

Nonetheless, he said the discussions would be carried out “nicely” as it would not be too rigid or “be in a position to demand”.

When asked of the ideal price, he said: “I have (the number) in my head but I’m not going to tell you because the discussion is ongoing.”

He said the company had started the discussion with the new Mentri Besar Azmin Ali and his team and he hoped that it would not take too long to come to a resolution.

He added that even by selling Splash at book value, the shareholders would be foregoing the future earnings of the water asset that sums up to a net present value of RM1.4bil over 16 years.

Asked of feedback from the Government, Lin said the federal minister had indicated that the deal should be done on a “willing buyer, willing seller” basis.

The Selangor state government had offered RM7.65bil to take over four concessionaires, namely Konsortium ABASS Sdn Bhd, Syarikat Bekalan Air Selangor Sdn Bhd, Puncak Niaga Sdn Bhd and Splash.

Splash is the only one among them that had yet to strike a deal with the federal and Selangor governments.

“I don’t think any clear decision has been made yet and it will involve not just the Selangor state government but also the federal government and both have to agree,” he said.

On the commencement of Mass Rapid Transit line 2, he said it was opportune time for the Government to spend on infrastructure now because of low commodity prices.

However, he could not estimate the savings from lower building material prices as the project was still some time away.

On top of meeting its key performance indicators to deliver the project on time and within costs, it would also focus on safety.

As he expected works for line two to start in 2016, he said it had one year to train the workers on better safety practices.

On its growth outlook, Lin said it would put a bid for the RM27bil Penang Transport Master Plan.

“I hope they (the Penang state Government) don’t look solely from a pricing consideration as the saying goes good is not cheap and cheap is not good,” he added.

As for its property arm, Gamuda Land managing director Chow Chee Wah said it targeted RM1.8bil in sales for the financial year ending July 30, 2015 and noted that there were signs of a softening market.

Its new launches include Highpark residences in Kelana Jaya and Kg Sg Serai, Kuang, which is some 11 km south of Rawang.

He said the company had experienced a few softening market cycles and would strategise to roll out the right products.

It targeted to launch link houses in Serai tpriced at about RM500,000. The site is 2km from the Kuang KTM station.

As for the land in Mukim Tanjong Duabelas it acquired for RM392.2mil a few days ago, it expected to launch the project in another two years with prices at around RM450,000.

Lin said the company, which allocated RM3bil to boost its landbank two years back, had used some RM2.2bil to-date.

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