Gamuda  announced  that  it  had  on  11  November  2014  entered  into  a Shareholders’  Agreement  with  MMC  Corp  to  regulate  their  rights  and liabilities  as  shareholders  of  the  joint  venture  company  named  “MMC Gamuda KVMRT (PDP SSP) Sdn Bhd” on a 50:50 basis. The JV Co will act as the Project Delivery Partner (PDP) for the implementation of the KVMRT Sungai Buloh-Serdang-Putrajaya Line/Line 2 project which will cost approximately RM23bn. (Source: Bursa Malaysia)

Comment:  Just as in the Sungai Buloh-Kajang Line project, a separate 50:50 JV Co has been formed to  act as the PDP for the Line 2 project. We await guidance on the PDP fee for this project, which may be lower than the 6% for the SBK Line. For Gamuda and MMC Corp, it is also critical that their JV will be awarded the underground works for Line 2, which we expect.

We maintain our target price and rating for Gamuda (RM5.14, ADD, TP RM5.30).

Source: Affin Hwang Capital Research - 12 Nov 2014