The market is pricing in election risk. The flow of contracts could be affected if the opposition coalition wins the election. The opposition has also indicated that it wants to review the mega projects, which could have an impact on projects Gamuda has already secured.
Another concerns about Gamuda’s property arm, which is expected to see a slowdown, particularly in Vietnam .
In 50:50 JV with MMC Corp, Gamuda has secured the lion’s share of Klang Valley ’s MRT construction and engineering works, including the rm8.2 billion contract to construct a 9.5km underground tunnel and seven underground stations.
The MMC-Gamuda JV is the project development partner for the MRT project.
This brings Gamuda’s order book to over rm4.8 billion/
The stock may rebound when the political risks subside and there is more news flow on infra projects.
Another potential catalyst for the construction industry is the proposed second MRT line. A firm decision on it is expected to be made over the next two to three quarter from Oct 2012.
Meanwhile speculation that major shareholders and directors of Gamuda reducing their stakes in Gamuda. Market observers said that it could be a usual portfolio reorganization in anticipation of Malaysia ’s impending general election.
Major shareholders and directors of Gamuda had disposed of Gamuda in early Oct 2012. The EPF had sold 4.5 million shares. Following the sale the EPF still holds 5.37% stake in Gamuda.
Meanwhile Raja Datuk Seri Eleena Azlan Shah, a director in Gamuda, had sold a total of 1.9 million shares in the open market at between rm3.52 and rm3.57 each. Followinf the sale, Eleena still owns an indirect 6.2% and a direct 0.01% stake in Gamuda.
Another director, Datuk Ng had disposed three million shares at rm3.50 each leaving him with a remaining direct stake of 1.39% in Gamuda.