KUALA LUMPUR: AmResearch is maintaining its Buy recommendation on GAMUDA BHD [], with the fair value raised to RM4.25 a share from RM4.20,'' based on a 5% discount to its sum-of-parts value.
In a research note on Thursday, March 24, the research house said this was to account for maiden contributions from the Sg. Buloh-Kajang mas rapid transit (MRT) line as well as the Madge Mansion development, but partly mitigated by the likelihood of further delays to the double-tracking project.
'The increasing newsflow on the Klang Valley MRT project would likely regalvanise investor interest in Gamuda, in our view,' it said.
The 51km-Sg. Buloh-Kajang route, which is the first major line for the new MRT system, appears set to take off.
AmResearch said pre-qualification tenders may be out next month ahead of the target date for the commencement of CONSTRUCTION [] by July 2011.
'There are strong indications that the overall cost for the Sg. Buloh-Kajang line could be higher than expected at RM20 billion (our earlier estimates were around RM12 billion). By extension, this may imply more scope of works for Gamuda for the entire system ' which will reportedly cost over RM50 billion against the initial estimate of RM36 billion,' it said.
AmResearch said balance sheet risk has been substantially reduced as this massive project would likely now be funded via a Ministry of Finance-appointed special purpose vehicle.
Gamuda's exposure to the region is only about RM200 million or less than 5% of its outstanding orderbook of RM5.5 billion.
In a research note on Thursday, March 24, the research house said this was to account for maiden contributions from the Sg. Buloh-Kajang mas rapid transit (MRT) line as well as the Madge Mansion development, but partly mitigated by the likelihood of further delays to the double-tracking project.
'The increasing newsflow on the Klang Valley MRT project would likely regalvanise investor interest in Gamuda, in our view,' it said.
The 51km-Sg. Buloh-Kajang route, which is the first major line for the new MRT system, appears set to take off.
AmResearch said pre-qualification tenders may be out next month ahead of the target date for the commencement of CONSTRUCTION [] by July 2011.
'There are strong indications that the overall cost for the Sg. Buloh-Kajang line could be higher than expected at RM20 billion (our earlier estimates were around RM12 billion). By extension, this may imply more scope of works for Gamuda for the entire system ' which will reportedly cost over RM50 billion against the initial estimate of RM36 billion,' it said.
AmResearch said balance sheet risk has been substantially reduced as this massive project would likely now be funded via a Ministry of Finance-appointed special purpose vehicle.
Gamuda's exposure to the region is only about RM200 million or less than 5% of its outstanding orderbook of RM5.5 billion.
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