Gamuda falls 3%, major shareholders cut stakes

KUALA LUMPUR (Oct 15): Gamuda Bhd shares fell as much as 2.6% in intraday trade on speculation that major shareholders and directors of the construction firm reducing their stakes in the company.

While it is unclear for now what prompted them to sell their shares, analysts believe it could be a usual portfolio reorganisation in anticipation of Malaysia's impending general election.

"It could be due to election risk," an analyst told theedgemalaysia.com over telephone today (Monday).

At 5.00pm, Gamuda closed at RM3.44 with some 4.9 million shares done after falling as much as nine sen to RM3.43 earlier.

Major shareholders and directors of Gamuda had disposed of the stock last week.

According to exchange filings, the Employees Provident Fund (EPF) had sold a total of 4.5 million shares in three separate transactions.Following the sale, the EPF still holds 5.37% in Gamuda, the filings show.

Meanwhile, Raja Datuk Seri Eleena Azlan Shah, a director in Gamuda, had sold a total of 1.9 million shares in the open market at between RM3.52 and RM3.57 each, according to updates to the bourse. Following the sale, Eleena still owns an indirect 6.2% and a direct 0.01% stake in the construction firm, these updates show.

Another director, Datuk Ng Kee Leen, had disposed of three million shares at RM3.50 each, leaving him with a remaining direct stake of 1.39% in Gamuda, filings indicate.

The analyst believes the divergence between the direction of Gamuda's share price and the progress of the company's proposed mass rapid transit (MRT) project is unjustified.

According to the analyst, the stock's price has declined despite the project progressing well.

According to Gamuda's website, the construction firm and conglomerate MMC Corp Bhd have formed an equally-owned joint venture entity MMC-Gamuda KVMRT (PDP) Sdn Bhd to undertake the MRT project.

MMC-Gamuda KVMRT was appointed by the Government as the project delivery partner for the mega project.

The MRT’s first line, known as the Sungai Buloh-Kajang Line (SBK Line), comprising 31 stations, is expected to begin operations by December 2016 under the initial phase. The SBK Line is anticipated to be fully operational by July 2017, Gamuda's website indicates.