March 10, 2010

GAMUDA - Price Target News

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: RHB

KUALA LUMPUR: RHB Research Institute is maintaining its Underperform on GAMUDA BHD [] with a fair value of RM2.12 after the infrastructure company and WCT BHD [] faced a legal suit in Qatar.

Bahrain Asphalt Establishment (BAE), a sub-contractor to the 51:49 JV between Gamuda and WCT for the Dukhan Highway project in Qatar, has served the Gamuda-WCT JV a request for arbitration.

BAE is claiming for QAR109.3 million (RM101.1 million), coupled with unquantified sums for legal, arbitration and interest costs.

Gamuda has stated it has a good defence against the claims.

"Based on Gamuda's 51% share of the total sum claimed (before legal, arbitration and interest costs) of RM51.5 million, the potential loss to Gamuda is 2.6sen per share that will put an 18% dent to our projected FY07/10 EPS of 14.4sen for Gamuda.

"Forecasts are maintained pending the outcome of the arbitration," it said.

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