Frankly Speaking: Why the sudden euphoria?

This article first appeared in The Edge Malaysia Weekly, on April 29, 2019 - May 05, 2019.
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Last week, DWL Resources Bhd (formerly known as Spring Gallery Bhd), which manufactures ceramics and pottery products, announced it would team up with construction company Gadang Holdings Bhd to bid for jobs under the RM44 billion East Coast Rail Line (ECRL) project.

To recap, the two companies involved in the joint venture are Million Rich Development Sdn Bhd, a unit of DWL Resources, and Gadang Engineering (M) Sdn Bhd, which is wholly owned by Gadang.

DWL Resources also appointed Datuk Seri Shahril Mokhtar — the former CEO of Mass Rapid Transit Corp Sdn Bhd — as managing director.

DWL’s stock price more than doubled from just below 80 sen in early April to RM1.70 on April 23 on strong trading volume. It closed at RM1.23 last Friday, giving the company a market capitalisation of RM240.4 million. Gadang’s share price, meanwhile, jumped by one-third to 94.5 sen on April 22 on robust volumes.

But just because DWL and Gadang have agreed to throw their hat into the ring and participate in the bids does not necessarily mean they will be awarded ECRL jobs that may lift their respective fortunes.

The government, in the Malaysia Baru era, has made it clear that large-scale contracts such as the ECRL will be awarded via open tender to ensure it gets the best price by adhering to good governance practices.

So, do those who are bullish on these counters know something others don’t or are they just hoping to get lucky?

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