Gamuda: In discussion with banks to fund potential projects commentary

According to sources, Gamuda  (GAM MK, Sell, TP: RM2.94)  has started discussion with a consortium of banks for a multi-billion ringgit facility to finance the slew of mega projects that it would be undertaking soon, which includes the Klang Valley MRT (KVMRT) and the RM7bn Electrified Double Track Railway Project (EDTP) from Gemas to Johor Baru. For the KVMRT project, Gamuda together with its project project delivery partner, MMC Corp Bhd, are mandated to lead the implementation and delivery of the MRT. Currently, Gamuda-MMC are still in the running for the RM4bn tunnelling portion of  the KVMRT project. Gamuda has confirmed that it has been invited by China Railway Construction Co as one of its local construction partners for the upgrading of the RM7bn Gemas-Johor Baru railway line to an electrified double-tracking track. (StarBiz)


Comment by ECMLibra : We believe the recent run-up in Gamuda’s share price has discounted the firm possibly undertaking the Gemas – Johor Baru EDTP with its Chinese counterpart. We estimate Gamuda’s portion of the EDTP works is c.RM2.5bn. Our back-of-envelope calculations show that even with the EDTP, this only increases our RNAV valuation of Gamuda from RM2.94 to RM3.10, which represents 13% downside from last traded price of RM3.55. Maintain Sell.

Popular posts from this blog

Malaysia Inflation to start easing end-3Q or early 4Q2011

Image
Malaysia Inflation Rose To The Fastest Pace.
Inflation is still a major concern and we expect the upward pressure to stay in 3Q2011 coming from food & non-alcoholic and clothing/footwear in  view of the festive seasons. Impact from June’s electricity tariff hike is expected to continue. But the  upward inflation pressure can be contained from stronger RM/USD and high base comparison. Nonetheless, we expect inflation to start easing by end 3Q2011 or early 4Q2011. Meanwhile, with global uncertainties flared by euro debt crisis and slower US economic recovery lingering, it has forced AxJ policymakers to focus on growth as opposed to inflation. Rates hikes could be reaching its tail end. We expect BNM to accommodate further erosion in real returns by holding OPR at 3.00% to focus on growth. But possibilities for another 25bps hike in OPR remains, as it depends on inflation outlook. Likewise SRR hike will depend on liquidity inflow. If that happen, we expect another 50bps to 100bp…
Read more

Trump’s Win – Bark Worse Than Bite?

Image
While Asian equity markets may remain soft after the surprise of Donald Trump’s win in the US presidential election, we look forward to buying opportunities. Essentially, we do not expect significant economic repercussions on Malaysia’s economy or corporate earnings, save for the indirect impact on downward biases for the ringgit vs the US dollar and on interest rates. We highlight the trough prices of our conviction picks, as well as some buying opportunities.

WHAT’S NEW
• Near-term confidence pricked. Asian equity markets have swooned on knee-jerk reactions to Trump’s surprise win; the FBMKLCI eased 1%. Despite the major turnaround in US equities after Trump’s acceptance speech which promoted national unity and stressed on fiscal stimulus (the DJI futures initially fell by as much as 800 pts before the cash DJI remarkably recovered to positive territory), investment sentiment in Asia may remain damp and to be swayed by Trump’s anti-globalisation rhetoric. Nevertheless, we do not …
Read more

FBM KLCI Technical Outlook

Image
Stocks on Bursa Malaysia snapped a three-day losing streak to end higher last Friday on bargain hunting in selected heavyweights, which saw late fund buying of Tanaga Nasional and Malayan Banking. Bargain hunting by institutional funds supported the local market but further gains were limited by fears of a better-than-expected US third-quarter gross domestic product data which will be out later of the day. Asian stock markets were mixed as they were still affected by a flurry of major corporate earnings reports across the region and the declining oil prices. The ringgit weakened further against the US dollar at 4.1970/1020 from the 4.1810/1900 recorded on Thursday, tracking the performance of emerging Asian currencies. At close, the FBM KLCI settled at 1,670.27, up 1.24 points or 0.07%, from Thursday’s close of 1,669.03, after opening 0.58 of a point higher at 1,669.61 and moved between 1,666.97 and 1,671.72 throughout the day. On a weekly basis, the benchmark index gained 0.29 of a p…
Read more