Gamuda active, up 1.22% after MRT 2 underground works set to proceed

KUALA LUMPUR (Oct 29): Gamuda Bhd shares rose 1.22% in active trade early today after the Ministry of Finance announced that MMC-Gamuda KVMRT (T) Sdn Bhd, a joint-venture between MMC Corp Bhd and Gamuda Bhd, will remain the contractor for the underground works portion of the MRT Sungai Buloh-Serdang-Putrajaya line (MRT2) at an even lower cost of RM13.11 billion.

At 9.03am, Gamuda gained 3 sen to RM2.50 with 3.69 million shares traded.

This is after the consortium agreed to a larger cost cut of 21.5% or RM3.6 billion, which is RM1.47 billion more than the reduction of RM2.13 billion previously offered, following renegotiatons between both sides on Oct 22.

Meanwhile, CIMB IB Research maintained “Reduce” on Gamuda Bhd at RM2.47 with a higher target price of RM2.30 (from RM2.18) after the renegotiation for the Mass Rapid Transit 2 underground scope was cut by 38%.

In a note Oct 28, the research house said the final outcome is less negative than its base case cut of 60%.

“FY19-21F EPS up by 3.5-7.5%. Reiterate Reduce but with a higher target price,” it said.

This article first appeared in The Edge Financial Daily, on Oct 29, 2018.

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