KUALA LUMPUR (Aug 10): TA Securities Holdings Bhd and Kenanga Investment Bank Bhd trimmed their Gamuda Bhd share target prices (TP) to RM3.92 and RM4.30 respectively after Gamuda said its associate Syarikat Pengeluar Air Selangor Holdings Bhd (Splash Holdings) has resolved to accept Pengurusan Air Selangor Sdn Bhd's offer to buy 100% of Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash).

Splash is a wholly-owned subsidiary of Splash Holdings. It was reported earlier that Pengurusan Air Selangor proposed a RM2.55 billion cash offer to take over Splash. The offer price is a 28% discount to Splash's net book value of RM3.54 billion as at June 30, 2018.

Today, TA Securities said: "In view of the discontinuity of Gamuda Water as the O&M (operation and maintenance) operator, we temporarily reduce the target PE multiple for concession business from 10x to 9x, to compensate for the potential earnings gap arising from the disposal of Splash. We arrive at a lower target price for Gamuda at RM3.92, based on 14x CY19 construction earnings, 12x CY19 earnings, and 9x CY19 concessions earnings. Maintain HOLD."

At Bursa Malaysia today, Gamuda shares settled at RM3.78 at 12:30pm.

Kenanga said: "We maintain our OUTPERFORM call on Gamuda based on a lower SOP (sum-of-parts)-driven target price of RM4.30 from RM4.35 as we factor in the lower-than-expected offer price into our valuation. We believe that after the resolution of the water saga in Selangor, Gamuda would be able to move on and focus on future projects like the Penang Transport Master Plan, and MRT3."