KUALA LUMPUR, April 5 — Public Investment Bank Bhd (PIBB) has maintained its "outperform" call on Gamuda Bhd after the latter's proposal to the Federal Government to place its four-highway concessions, namely Kesas, Litrak, SMART Tunnel and SPRINT in a trust company has finally come to fruition.

In a note, PIBB said Gamuda has received an offer from Amanat Lebuhraya Rakyat Bhd (ALR), a private not-for-profit company established to assume ownership of the highway concessions for RM5.5 billion, including all borrowings tied to the concessions, with an equity value of RM4.4 billion.

"The offer, which remains valid until April 30, 2022, is deemed acceptable, given Gamuda’s eager interest to dispose of all its highway concessions due to increasing uncertainty of compensation receivables from the government in relation to its tight finances.

"This could also help Gamuda attain a net cash position of RM0.6 billion to better stomach upcoming mega infrastructure projects, such as MRT 3 and Island A of Penang South Reclamation project," it said.

PIBB said Gamuda’s effective stake in these four-highway concessions would be RM2.3 billion, adding that according to Gamuda’s management, proceeds from the disposals will be utilised for reinvestments, to reward its shareholders and reduce its borrowings.

"As such, we maintain our ‘outperform’ call with a target price of RM4.09, pending completion of the deal," it said.

Meanwhile, CGS-CIMB maintained its ‘add’ call on Gamuda, with a target price of RM4.25.

It said this deal will be the first of its kind in the country; noting that post-acquisition by ALR, there will not be any more toll rate increases and each concession agreement will be restructured to end tolling in 2032 or when Sukuk is fully settled, while the government would save RM4.3 billion in toll compensation.

The research house estimated that the RM2.3 billion proceeds from the disposal would boost Gamuda’s end-January 2022 cash position by 63 per cent to RM6 billion and substantially improve its net gearing of 18 per cent to an estimated net cash position of RM611 million.

"We would not discount the possibility of special dividends. Assuming 10 to 30 per cent of the RM2.3 billion or 91 sen per share cash proceeds are earmarked for this purpose, potential special dividends could range between 18 sen to up to 27 sen per share.

"We believe the offer will be accepted by the cut-off date for acceptance or rejection as it puts closure to the long-drawn highway divestment scheme, and the Highway Trust model is deemed to be a win-win deal for Gamuda, the government and highway users over the longer run," it added.

At 10.30am, Gamuda’s shares were traded at RM3.60 per share with 3.56 million shares changing hands. — Bernama