PETALING JAYA: Gamuda Bhd managing director Datuk Lin Yun Ling has given foreign fund managers an assurance that he will stay on to lead the construction group he founded for at least five more years.
StarBiz understands that Lin spoke to foreign institutional investors via teleconference on Monday and told them that his move in selling his stake was not a signal that he was exiting Gamuda.
Datuk Lin Yun Ling
He also told them that the fact that he was still heading Gamuda after trimming his equity interest in the company in April 2002 demonstrated his intention to remain in his post.
StarBiz also learned that Lin had admitted that he expected the flow of construction jobs to slow down in the near future.
Gamuda, he said, would still be able to replenish its order book, currently at a record RM11bil, but the jobs secured were unlikely to be as big as those in hand now.
The group’s earnings might not have peaked although the value of its order book might already have, he told the foreign investors.
The session was prompted by the sharp fall in Gamuda’s share price last Thursday when Lin sold 70 million shares, cutting his stake to 1.7% from 5.2%, for “estate planning purposes.”
Gamuda rebounded yesterday with a 20 sen gain to RM3.86 as the day’s most actively traded counter, on volume of 41.6 million shares.
A head of research said the heavy selldown on the construction blue chip was mainly due to the lack of details on the rationale behind Lin’s move.
“The market was left guessing what could possibly be the worst case scenario for an insider to sell the stake.
“Lin could have been more transparent on the share disposal,” he added.
Some institutional investors were upset that the group had been feeding analysts with positive news on Gamuda’s earnings prospects, which had helped push up its share price following their “buy” or “overweight” recommendations.
The stock price skidded when the market was abuzz with speculation over all the possible adverse circumstances that could affect Gamuda, one of which was that the construction industry had reached the end of the upcycle.
The group, it was felt, may experience margin squeeze given the rising price of building material costs and that being a non-bumiputra construction company, Gamuda may also face a tougher operating environment in terms of benefiting from the Government’s pump priming measures.
However, this is not the first time Lin has made such an unexpected move.
When he sold a 1.4% stake in the open market in April 2002, Gamuda’s share price nose-dived, wiping out about RM330mil in market value.
Gamuda’s order book had also swelled to a record RM3bil at that time.
In 2000, Lin took shareholders by surprise when he bought a 44% stake in polymer lithium ion rechargeable batteries maker Dyna Plastic Sdn Bhd for RM68mil cash.
Lin defended the purchase, saying that it was to give the group a more steady earnings growth given the cyclical nature of the construction industry.
The investing community, however, did not accept news of the deal well and Gamuda’s stock price was hammered.
All these happened in less than eight years. Questions are now being asked if Gamuda still deserves the higher premium it currently enjoys on its shares.
By The Star - StarBiz (by Kathy Fong)
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