Gamuda plunges 22%, MMC Corp fell 11% on MMC-Gamuda contract termination

KUALA LUMPUR: Gamuda Bhd fell 22% in early trade Monday after the Government cancelled MMC-Gamuda’s contract for MRT2’s underground portion

Gamuda, the top losers, fell 22.12%, or 71 sen to RM2.50 with over nine million shares traded in early trade.

MMC Corp, also one of the top losers, fell 11.11%, or 15 sen to RM1.20.

The federal government has decided to terminate the underground contract of the mass rapid transit Line 2 (MRT2) project with contractor MMC-Gamuda.

This follows the failure by the federal government and the MMC-Gamuda joint venture to reach an agreement relating to the underground portion of the construction project.

"All unfinished underground work will be retendered out through an international open tender process.

“This decision was made after considering that the federal government can achieve further significant savings by retendering the underground work package compared with the offer made by the existing contractor," said Finance Minister Lim Guan Eng in a statement.

CIMB Research is retaining its underweight recommendation on the construction sector on news the Ministry of Finance would terminate MRT 2’s underground contract, replacing it with an international tender.

It said the cost for MRT 2’s above-ground portion will be cut by 23% to RM17.4bil with no cancellation of stations. MMC-Gamuda JV will play a turnkey role.