Gamuda Bhd's shares were slightly lower this morning despite news of its proposal for its four tolled highways to be taken over by a RM5.2 billion superpower trust body.
At 10.17am, the counter dropped one sen to RM3.49 with 49,000 shares changing hands.
The infrastructure and property development group reportedly proposed to the government to sell four of its highway concessions to a trust body known as Amanah Lebuhraya Sdn. Bhd.
According to Bernama, the trust body will finance the acquisition by raising money from bond investors who promise annual returns of between 4.0% and 5.0%, supported by cash flow from the toll without the need for government guarantees.
In its research note today, Kenanga Investment Bank Bhd opined that the public trust body is a good idea because it will benefit Gamuda and the government as well as businesses and the people in Kuala Lumpur and Selangor.
“By implementing this proposal, we see the government as the biggest beneficiary because it can save toll compensation amounting to RM5.3 billion over the remaining period of the toll concession.
“This will indirectly help Gamuda increase the equity of private funding initiatives to reactivate the planned Mass Rapid Transit 3 (MRT3) project. This means reducing the financial burden and at the same time, stimulating the economy, ”he explained.
The research firm is also confident that the new proposal is better than the model proposed in 2019 in which the government should be the guarantor and recommend a congestion charge model that could disrupt the flow of traffic on competing highways or public transport.
Therefore, Kenanga Investment maintained an ‘outperform’ rating on Gamuda shares with a target price of RM4.17.
Meanwhile, CGS-CIMB Securities is of the view that Gamuda may use the proceeds of the sale to fund part of the 10-year Penang South Islands project fund and may have a special dividend payment.
The firm maintained an 'add' recommendation to the company's shares besides lowering the target price by 10% to RM4.18 per share.
