Gamuda starts working on succession plan

KUALA LUMPUR: Gamuda Bhd managing director Datuk Lin Yun Ling said the group has started working on a succession plan while he would continue to helm the company he founded.

Describing Gamuda’s prospects as “good”, Lin is confident the group would be able to meet all “the guidance that it had given to analysts earlier”.

He denied market talk that his share sale was due to any adverse changes on the group’s fundamentals or earnings prospects.

“I brought up the company over the past 25 years. I certainly don’t intend to have an abrupt exit ... we will ensure that over the next five years or longer, there will be a smooth transition,” Lin told StarBiz yesterday.

He said he could foresee the day Gamuda would be run by professional managers who were not shareholders.

“There are two or three names who have the potential (to take over the top executive positions),” he added.

Lin trimmed his stake to 1.7% from 5.2% last week. The shares were placed out to global institutional investors.

The share sale sparked heavy sell down on Gamuda shares amid worries that the group’s prospects would not be as rosy if Lin exited. HLG Securities anlayst Teoh Paul Keng noted that the rate Gamuda replenished its order book had decelerated. “The group has not secured anything substantial besides the double tracking project,” he said.

The group’s order book ballooned to RM11bil after it bagged the double tracking project together with MMC Corp Bhd.

The share price tumbled to a low of RM3.20 – down nearly 40% from its recent high of RM5.30. It closed at RM3.92, up six sen yesterday.

“I didn’t expect the (market) reaction to be so strong,” Lin said.

Lin noted it was “unfortunate” that investors perceived the “18-month lock-in period” for his remaining stake as a sign that he would only stay on for that period.

He pointed out that this was the fourth time he sold down his stake in Gamuda.

“Over the last 16 years, it (the selling down) hasn’t affected my commitment to grow the company and make it a success,” he said.

Lin stressed he had never been the controlling shareholder. He was holding about 16% stake when Gamuda floated its shares on Bursa Malaysia.

“There are lots of rumours flying around, such as our Vietnam project is not doing well and I have health problems.

“My plan to sell shares has nothing to do with what is being speculated. It is mainly for estate planning purposes,” said Lin, adding that the share sale was to diversify his personal wealth.

“But I suppose for the investors, there is never (a good) time for the CEO to sell shares,” he quipped.

Lin refuted market talk that he sold shares because Gamuda was under pressure from the Malay Chamber of Commerce in terms of distributing 30% of the sub-contracts to bumiputra contractors. “That issue has been resolved to our (Gamuda’s) satisfaction,” he said.

On the outlook of the construction sector, Lin said it would still be “quite good” for the next few years and there was no sign of a downturn.

But in terms of the number of jobs being dished out, Lin opined it would be the same as in the past two years.

“The slowdown in the US would trigger the need for the Government to pump prime (the economy) a bit more.

“You will have some big ticket items to be rolled out from the development of the economic corridors,” he added.

By The Star - StarBiz (by Kathy Fong)