KUALA LUMPUR, June 24 2019 : Gamuda Bhd’s cash position will be significantly enhanced, providing significant liquidity to its asset profile, upon successful acquisition of its four tolls by Finance Ministry.
MIDF Research said it opined the the potential cash proceeds could be utilised for other projects, which includes the funding of its large infrastructure projects in Penang.
“At this juncture, we do not rule out the prospect of a special dividend as to compensate for the loss in a stable income source going ahead,” it said in a note today.
Gamuda’s effective stake in four highways carries an estimated total value of RM2.4 billion or equivalent to 95.6 sen per share.
At present, the company owns 43.6 per cent of Lingkaran Trans Kota Sdn Bhd (Litrak), Lebuhraya Shah Alam (Kesas) (70 per cent), Sistem Penyuraian Trafik KL Barat (Sprint) (51.8 per cent) and Smart Tunnel (50 per cent).
“Notably, we think the offer price was reasonable as the amount did not deviate much from our previous estimates at RM2.5 billion,” MIDF Research said, adding, it was maintaining a “neutral” call on the company with the sum-of-the-parts valuation derived target price of RM3.38.
Meanwhile, AmBank Research said Gamuda is is getting a good deal for the Lebuhraya Damansara Puchong (LDP), wholly-owned by Litrak, Kesas and the Smart Tunnel, but less so for Sprint.
Hence, Gamuda is highly likely to accept the offer by Finance Ministry to acquire the highways.
“All in at RM2.36 billion, the price tag is at a three per cent premium to our valuation of RM2.3 billion based on a discount rate of six per cent.
“The proceeds from the disposal would reduce Gamuda’s net debt and gearing of RM3.4 billion and 0.44 times (adjusted for RM1.02 billion proceeds from the recently concluded disposal of its 40 per cent stake in Syarikat Pengeluar Air Selangor Holdings Bhd) to RM1.1billion and 0.14 times, respectively,” it added.
The research house has cut its financial year 2020-2021 (FY2020-2021) net profit forecasts by 20 per cent and 34 per cent respectively, as contributions from the toll road assets is expected to halve in FY20 and completely be removed in FY21, partially mitigated by interest savings from the disposal proceeds.
“Realistically, it will take Gamuda some time to identify new businesses to fill the vacuum.
“The market also has high expectations of the massive Penang Transport Master Plan (PTMP) of which Gamuda is in the driver’s seat via its 60 per cent stake in the consortium, that has been appointed the project delivery partner,” it added.
At 11.01 am today, Gamuda’s shares declined 14 sen to RM3.69 with 15.6 millions shares traded. – Bernama