Buy call maintained for Gamuda despite water deal snag

Business & Markets 2013
Written by Jonathan Gan at theedgemalaysia.com
Thursday, 05 December 2013 11:46
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KUALA LUMPUR (Dec 5): Alliance Research has maintained its buy call on
Gamuda Berhad with a target price (TP) of RM5.66 per share, despite the
company rejecting the latest offer by the Selangor government to take over its
water assets.
In a note today, the research house noted the failed attempt by Kumpulan Darul
Ehsan Berhad (KDEB) to acquire Gamuda’s stake in Syarikat Pengeluar Air
Sungai Selangor (SPLASH).
Gamuda announced that it was unable to consider the offer by KDEB due
partly to unfair valuation methodologies and uncertain status of O&M
(operations & management) operators.
The research house said it was shocked by this latest development as their
past conversations with the Gamuda indicated that they were quite agreeable
with the pricing.
“Investors buying into Gamuda in hopes of a special dividend from the sale of
SPLASH (RM0.32/share) could be disappointed. Nonetheless, tabling of
another offer by KDEB, which we gather is on the cards, should revive interest.
We advise investors to accumulate on the current weakness” it added.