Do you dare to buy Gamuda-WR and pay 25 cents subscribe and get Gamuda Warant????
Exercise price: RM 4.05
Expiry: 5 years
Gamuda warrants surge more than double on first day trading
By Kamarul Anwar / theedgemarkets.com | February 12, 2016 : 1:05 PM MYT
KUALA LUMPUR (Feb 12) Gamuda Bhd’s renounceable warrants GAMUDA-WR was traded by as much as 55 sen this morning, or more than double of its issue price, once the securities were officially on the market today.
Given the lack of growth in its mother shares recently, market observers said investors are using GAMUDA-WR as a cheaper play to analysts’ expectation for the construction giant to be the biggest beneficiary among other industry players.
At noon break, GAMUDA-WR pared its gains. The derivative was traded 17 sen or 85% higher to 37 sen, with 14 million securities changed hands.
According to a Bursa Malaysia filing, GAMUDA-WR – which was offered on a basis of one warrant for every six Gamuda shares held – was transferred to a shareholder’s depositor’s account yesterday (Feb 11). It shall expire five years from the date the warrant was issued.
The one-for-one warrant has an exercise price of RM4.05, which when imputed into the last traded price, was nearly at par with Gamuda’s mother share value of RM4.44.
Gamuda has often been touted by analysts as their top picks for construction sector, given the group’s position as the project delivery partner for the mass rapid transit (MRT) projects in the Klang Valley. However, with large exposure to foreign investors, Gamuda’s stock has fallen from its all-time high of RM5.223 as foreigners exited Malaysia and other emerging markets.
Bloomberg data showed that currently investors from Malaysia hold 51.71% of Gamuda’s shares. While the holding is lower than in August – when Gamuda fell to below RM4 level – the current percentage of Malaysian shareholders is still higher than the past range of around 45%.
CIMB Investment Bank Bhd, in a note dated Feb 11, repeated its stance that Gamuda is its “top big-cap pick” in the construction sector. Analyst Sharizan Rosely said that should Gamuda win the tunnelling package of the second line of MRT, its order book will increase by more than sevenfold to RM6 billion odd.
Quoting a media report on MRT 2’s recently closed tender submissions, Sharizan said Gamuda’s 50%-owned unit for the MRT projects MMC-Gamuda JV stands to win a good chance of winning the tunnelling package, given its track record in the first MRT line.
“The tunneling job will be awarded on a Swiss Challenge basis. Under the Swiss Challenge system, MMC-Gamuda will have the first right of refusal to undertake the job at the lowest bid plus a small percentage of the margins,” he said. The note also quoted the media report saying the tunnelling package has an estimated value of over RM12 billion.
CIMB has a target price of RM5.43 for Gamuda. Should it reach that level, GAMUDA-WR could be traded at RM1.38 to be at par with the mother share.