KUALA LUMPUR: Gamuda Bhd pared early gains on Monday after it was announced that MMC-Gamuda joint venture will remain as the contractor for the underground portion of the Sungai Buloh-Serdang-Putrajaya MRT line (MRT2) project.
The construction company shed 0.81% or two sen to RM2.45 with 13.4 million shares traded. MMC Corp Bhd fell 3.45%, or four sen to RM1.12 with 333,900 shares done.
The Ministry of Finance has announced that MMC-Gamuda KVMRT (T) Sdn Bhd will remain the contractor for the underground works portion of the MRT Sungai Buloh-Serdang-Putrajaya line (MRT2) – now at an even lower cost of RM13.11bil.
This is after the consortium agreed to give a larger cost cut of 21.5% or RM3.6bil, which is RM1.47bil more than the reduction of RM2.13 billion it previously offered, following a renegotiation between the consortium and the Ministry of Finance (MoF) on Oct 22.
CIMB Research has maintained “Reduce” on Gamuda Bhd at RM2.47 with a higher target price of RM2.30 from RM2.18 previously.
“MRT 2’s final cost cut remains net negative for Gamuda as we continue to expect a contracts downturn for 2019.
“We raise our end-CY19 target price by 13 sen to RM2.30 as we impute a less negative outcome for MRT 2 (40% discount to revised FD RNAV/share of RM3.84),” CIMB said, adding that the upside risk is revival of cancelled rail contracts: MRT 3 and HSR.
“We expect a muted share price impact from Penang Transport Master Plan (PTMP) given the longer-term benefits,” it said.