PETALING JAYA: Shares of Gamuda Bhd have taken a hit following news that the group will not be the project delivery partner (PDP) for the MRT3 or Circle Line project, which is set for completion in 2025.
The counter fell 26 sen or 5.13% to close at RM4.81, with 37.8 million shares being traded.
AmBank Research said it had confirmed with Gamuda that Mass Rapid Transit Corp Sdn Bhd (MRT Corp) has decided to carry out the MRT3 project via “build and finance” by a turnkey contractor instead of the PDP model used for MRT1 and MRT2.
Given that the turnkey contractor will have to fund “not less than 90% of the expected project cost (of RM35bil to RM40bil)”, the research house believes that the race has narrowed to only Chinese and Japanese contractors, who have backing from their governments to provide soft loans for infrastructure in developing countries.
“On a more positive note, Gamuda is confident that it will still likely secure the tunnelling package of MRT3.
“We take comfort that Gamuda’s role in MRT3 is potentially only reduced, but not eliminated, following the latest development,” it said in a note.
It has maintained its forecast, fair value of RM5.95 and “buy” call on the counter.
Separately, the group’s share price was also affected by an announcement that the deadline for the Selangor government’s takeover of Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) has been extended to July next year.
According to Gamuda’s 2016 annual report, the group owns a 40% stake in Syarikat Pengeluar Air Selangor Holdings Bhd (Splash Holdings).
Splash Holdings is the holding company of water concession holder, Splash, which operates three water treatment plants in Selangor.
An online portal quoted Selangor Mentri Besar Datuk Seri Azmin Ali as saying that the decision was made by the federal government, which had yet to provide a valuation assessment for the company.
Other shareholders in Splash are Kumpulan Perangsang Selangor Bhd and Sweetwater Alliance Sdn Bhd, a company controlled by businessman Tan Sri Wan Azmi Wan Hamzah.
The takeover of Splash by the state government was due to be completed on Oct 7 last year, but has been postponed twice due to pricing and valuation issues.
In March this year, the state government said negotiations had been postponed until Oct 5, 2017, as the federal government had asked for an extension to look at the valuation reports.
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