New high for Dagang NeXchange Bhd
KUALA LUMPUR: Latest developments in Vietnam, which involve Gamuda Bhd
returning 200 acres of land to the Vietnamese government, will not leave a significant dent on the group’s fundamentals, said AmInvestment Research.
The research house, which maintained its Buy call on the counter, said on Monday that Gamuda remained the best proxy to the booming construction sector in Malaysia given its dominant role in MRT (as the project delivery partner and tunneling contractor) and its involvement in Pan Borneo Sarawak Highway.
Its earnings visibility is strongly backed by an outstanding construction order book of RM8.3bil, it added.
It was reported that Gamuda is returning Parcel B of Gamuda City (also known as Yenso Park) in Hanoi to the Vietnamese government.
Gamuda Land Vietnam general director Chow Chee Fan was quoted as saying that the 500-acre commercial precinct of the 1,200-acre integrated property project had become “not worth developing” as Gamuda has to incur US$100mil (RM432mil) to relocate the existing occupiers.
However, the land to be returned include several lakes with a combined area of 300 acres.
This means Gamuda is effectively only giving up 200 acres of land, equivalent to half of its unsold land in Hanoi of 400 acres.
“We believe Gamuda will be compensated or reimbursed, one way or another, for the 200 acres of land it is surrendering.
“Based on our estimates, the land has a carrying value of about RM150mil and it could have created an additional RM250mil NPV via development over the long term.
“In the worst case, assuming that the land cost is not reimbursed, the total value eroded will be RM400mil,” it said.
The research house, however, said the returning of the land will not affect Gamuda City’s ability to continue contributing about 5% to group profits.
Excluding the returned land, it estimates Gamuda City’s outstanding GDV still stands at about RM5bil at present.
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