KUALA LUMPUR (Dec 11): The recent fall in Gamuda Bhd's share price to a one-year low presents a buying opportunity for investors as the stock remains one of the best rail picks, said CIMB Research.

The requirement for between 40% and 50% of local participation for the mass rapid transit 3 (MRT3) is a "positive surprise" for the group, CIMB Research said in a note today.

While Japanese and Chinese companies with self-financing capabilities are likely to vie for project's turnkey contractor role, the research house noted that Gamuda is not too perturbed by the lack of a project delivery partner (PDP) model.

Shares in Gamuda had plunged to as low as RM4.58 per share on Nov 21 after MRT Corp announced that it would be replacing the PDP model with a design, finance and operate structure for the third MRT project. Gamuda had, via a joint venture with MMC Corp Bhd, acted as the PDP for the first two MRT projects.

The counter has since regained some lost ground, rising 2 sen or 0.42% as at 11.37am to trade at RM4.77 per share.

According to Bloomberg data, 18 out of 24 analysts have a buy call on the counter with a consensus target price of RM5.95 by 20 out of 24 analysts.

However, CIMB Research also said a big unanswered question is whether or not MMC will return as Gamuda's 50:50 joint venture partner for the MRT3 as all tunnel boring machines and patents are currently registered under the partnership, CIMB said.

Following an analyst briefing last Friday, several research houses painted a positive outlook for the group, with TA Securities opining that the market may have overreacted to the change in delivery model for the MRT3.

"We still see Gamuda as a front-runner to get a sizable amount of the works in MRT3, albeit at lower expected margins compared with the first two lines," TA Securities said in a note today.

Meanwhile, AmResearch said the joint venture between Gamuda and Malaysian Resources Corp Bhd to bid for the Kuala Lumpur–Singapore high speed rail (KL-Singapore HSR) project is expected to have a technical edge over the consortium formed by Sunway Construction Sdn Bhd, IJM Corp Bhd, Maltimur Resources Sdn Bhd and Jalinan Rejang Sdn Bhd.

"We will not be surprised [if] YTL Corp Bhd decides to join the fray in bidding for the KL-Singapore HSR role given that YTL was the one who first mooted the project back in the 1990s," AmResearch said a note this morning.