Gamuda rises 15 sen/3% on RM392m Selangor land buy

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KUALA LUMPUR (Dec 2): Gamuda Bhd rose as much as 15 sen or three percent after the builder and property developer proposed to acquire a 104.1ha leasehold land in Kuala Langat, Selangor for RM392.17 million cash.

Gamuda later reduced gains and was up six sen or 1.2 percent at RM5.06 as at 10.47am with 639,800 shares done.

The stock was the fifth-largest gainer across Bursa Malaysia hitting a high of RM5.15 in early trades.

In a note today, Maybank Investment Bank Bhd said it was positive on the acquisition by Gamuda due to the strategic location of the tract.

With the acquisition, Maybank said Gamuda had achieved its target to spend RM1 billion a year to expand its landbank.

“We are positive on the acquisition as it is located near matured neighbourhood areas such as Bukit Rimau, Puchong, Subang, Shah Alam and Gamuda’s signature integrated township development in Kota Kemuning that is just 2km away

“The landbank enhancement will support its property earnings. Our earnings forecasts are unchanged. Gamuda is our top "buy" pick of the construction sector as beneficiary of mega transportation projects, with a real net asset value MYR6.00 target price,” said Maybank.

Similarly, RHB Research Institute Sdn Bhd is also positive on the acquisition by Gamuda.

RHB said the move indicated Gamuda's continuing effort in replenishing its landbank.

“Gamuda intends to develop on the land an 'extension' to its highly successful Kota Kemuning township which is only 2km away and currently at the tail-end of its development,” said RHB.

RHB noted that the acquisition would increase Gamuda's net debt and gearing to approximately RM2 billion and 0.37 time respectively. This compares to RM1.6 billion and 0.3 time as at July 30, 2014.

RHB said the higher gearing was “still manageable”.

RHB maintained its “buy” call on Gamuda shares with an unchanged target price of RM5.61.