Gamuda falls 6.05% after HSR scrapped and rating downgraded

KUALA LUMPUR (May 30): Gamuda Bhd shares fell 6.05% early today after the government decided to scrap the High Speed Rail (HSR) link project.

At 9.07am, Gamuda lost 25 sen to RM3.88 with 554,700 shares done.

On Monday, Prime Minister Tun Dr Mahathir Mohamad had said the decision to drop plans to build the HSR between Kuala Lumpur and Singapore was final.

Meanwhile, Public Investment Bank has downgraded Gamuda Bhd to “Neutral” at RM4.13 with a lower target (TP) price of RM4.30 (from RM6.20) due to  market fears on the high speed rail (HSR) confirmed and the increasing uncertainties surrounding the toll concessions.

In a note today, the research house said it lowered the target price after accounting for lower PER multiple for Gamuda’s construction business and 10% discount to the overall SOP valuations, though it must be noted that its share price has already reacted very negatively post-polling day.

“We make no changes to earnings estimates as we had not accounted for the HSR project in our forecasts. — theedgemarkets.com

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