Gamuda's Hanoi project may take centrestage at AGM

PETALING JAYA: The deteriorating global economic climate will likely cause worries among shareholders about the viability of Gamuda Bhd’s overseas projects at the company’s AGM tomorrow, among other key concerns.

Analysts expect the construction group’s investment in the Yen So Park project in Hanoi, Vietnam, to come under investors’ radar.

A senior analyst at a bank-backed research house told StarBiz that with the economy tumbling in Vietnam, he would not be surprised if Gamuda withdrew from that country.

“The Vietnamese stock market is softening and the economy is also currently in a downturn, so they (Gamuda) may reconsider the project,” he said.

Investors were not quite sure what the company was going to do and they might want to seek guidance from the management, he said.

As for the group’s massive double-track rail project in northern Malaysia, the analyst said there was talk it had been scaled down so shareholders would need to know the status of the project.

OSK Research analyst Jeremy Goh noted that part of the Hanoi project entailed Gamuda building a sewerage treatment plant for the Vietnamese government for which the company would be paid in-kind with development land.

“In the current negative global economic environment, it would be prudent to conserve cash,” he said, noting that while there was a possibility of Gamuda selling part of the land for cash, the current economic climate might make it hard for them to get a good price.

Gamuda’s 25 sen per share dividend policy is another major concern.

OSK’s Goh said: “The 25 sen dividend may not be sustainable by our estimates.”

“Maybe they could sustain the 25 sen payout this financial year (ending July 2009), given the special dividend received from (toll operator) LITRAK, a 44.8%-owned associate,” he said.

“However, there is less certainty on Gamuda’s dividend sustainability beyond that. We are more comfortable with a 12.5 sen dividend projection,” Goh added.

By The Star (by Loong Tse Min)