Gamuda Shares Falls

Gamuda's shares fell whopping 0.62 sen in the morning trade. The counter closed at 4.36.

Posted on FinanceAsia.com website.

• Managing director sells shares in Malaysia's Gamuda
  By Anette Jönsson 21 February 2008
  
  The $100 million deal sees Dato Lin cut his stake to 1.7%, but he shows commitment to the company by agreeing to an 18-month lock-up.
  
  Dato Lin, the managing director of Malaysian infrastructure, construction and civil engineering company Gamuda, last night sold about two-thirds of his shareholding in the firm, raising M$322 million ($100 million).
  
  The sale, which will see Lin reduce his stake to about 1.7% from just over 5.2%, came as the share price has eased back slightly from a 52-week high of M$5.75 in early January. Yesterday the stock closed at M$4.98 after falling 3.3%. The share price spiked up from about M$4.94 in the final minutes of trading, however, which was believed to have led to a slightly wider discount than initially planned.
  
  The Credit Suisse-led deal comprised 70 million shares that were offered at a price between M$4.60 and M$4.69, or at a discount of 5.8% to 7.6%. Given that this is the first placement in a Malaysian company since mid-November and only the second block trade of size in Asia since the equity markets took another turn for the worse in mid-January, it is somewhat difficult to put the indicated discount into context. However, the fact that it was a top-level insider selling likely meant the discount had to be somewhat greater than if it had been new stock. advertisement
  
  The $132 million follow-on by Singapore-listed CapitaRetail Real Estate Investment Trust on January 25 was completed at a discount of 9.9%, or 7.5% when considering that the new shares were sold without the right to an earlier declared dividend.
  
  The Gamuda offering was priced at the bottom of the price range at a 7.6% discount, but sources say the deal attracted solid demand and was safely covered after about one hour. A good chunk of the deal was allocated to London-based accounts while the rest went to Asia-based investors. Not surprisingly, given that the markets remain jittery, the order book was dominated by long-only investors.
  
  The deal should be quite easy to absorb since it accounts for only about nine days of trading volume. However, Gamuda already has a free-float of about 75%, meaning it is quite easy to buy stock in the market.
  
  While there is likely to have been some concern about the identity of the seller, one source noted that Lin hasn’t sold any shares in the company since 2002. He is expected to make a statement today outlining the reasons for the sale - believed to be related to private wealth management issues – and confirming his commitment to the company. The latter was also evident by the fact that he agreed to an unusually long lock-up of 18 months following this transaction.
  
  But the price sensitivity in this deal was likely also due to the fact that Gamuda is already trading at rich valuations. According to Bloomberg data, yesterday’s closing price translates into a price-to-earnings ratio of 25.7 times for the fiscal year ending in July 2008, while the Kuala Lumpur Composite Index trades at 15.5 times forward earnings. However, the valuation isn’t totally unwarranted given projections of 70% EPS growth this year and 80% between 2008 and 2009. Of the 21 analysts who cover the stock, 14 have a buy recommendation on it, four have a hold and only three of them advise clients to sell.
  
  Some investors are keen on Gamuda because of its involvement with construction projects in Vietnam, which is seen as an important growth-driver for the future. In addition, Malaysia is one of the best performing stockmarkets in the region so far this year. Although it is down 2.13%, only Jakarta, Shenzhen and Karachi have fared better. Japan, Korea, Hong Kong, Singapore, India, Australia and the Philippines have all lost more than 10% of their market value since the beginning of this year. (source: here )

And here is from Dow Jones newsclip

• Construction concern Gamuda (5398.KU) last down 8.4% at MYR4.56 in heavy volume, after filings indicate MD Lin Yun Ling cut his stake in group to 1.7% from 5.2% previously following sale of 70 million shares. "I am undertaking this partial disposal for estate planning purposes as I last sold shares in April 2002. I will retain approximately 33% of my shareholding prior to the transaction. I continue to be very optimistic about the prospects of Gamuda and have accordingly committed to an 18-month lock-up on my remaining shareholding," Lin says in press statement; adds will remain in present management position for foreseeable future. Dealers attribute early sell-down to panic selling following exchange filing; "it almost always a great concern when the founder and managing director of a company ceases to be a substantial shareholder. It's only a knee-jerk reaction. The stock is likely to recover some lost ground later in the day," says institutional dealer at bank-backed brokerage. Psychological support at MYR4.50, resistance at MYR4.98 (Oct.16 peak). (VGB)

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Here's a posting on Btimes this morning (22/2/08)

• Gamuda MD cuts stake, stock tumbles
  
  By Sharen Kaur Published: 2008/02/21
  
  Datuk Lin Yun Ling will still be committed to his role as a managing director and no management reshuffling is likely to happen, says a company official
  
  SHARES of Gamuda Bhd, Malaysia's second biggest builder, suffered their biggest drop in 10 years yesterday, after managing director Datuk Lin Yun Ling reduced his stake in the company to 1.73 per cent from 5.23 per cent.
  
  Lin sold 70 million Gamuda shares through Credit Suisse (Hong Kong) Ltd on Wednesday, reducing his stake to 34.7 million shares from 104.7 million in a deal believed to be valued at around RM350 million.
  
  While the news came as a surprise to the industry, Lin reiterated that he will be retaining the remaining shares and his management position, which he has held since 1981.
  
  "I am undertaking this partial disposal for estate planning purposes as I last sold shares in April 2002," Lin said in a statement, without elaborating on his future plans.
  
  He also said he was optimistic on Gamuda's prospects and has committed to an 18-month lock-up on his remaining shareholding.
  
  A company official told Business Times that there will be no changes in Gamuda following the announcement.
  
  "Lin will still be committed to his role as a managing director. Work will go on as usual and no management reshuffling is likely to happen," the official said.
  
  Gamuda was the most actively traded counter on Bursa Malaysia yesterday, with 69.84 million shares changing hands.
  
  The stock closed 15.66 per cent, or 78 sen, lower at RM4.20, after falling to as low as RM4.12 in afternoon trading.
  
  Analysts contacted were not concerned about the share price drop as they felt that Gamuda was fundamentally strong with a good cash flow position.
  
  "Lin is like any other shareholders who want to cash out big-time to plan something ahead," one analyst said.
  
  TA Securities research head Kaladher Govindan said he did not see any reason for alarm as Gamuda still has strong growth fundamentals.
  
  "I don't think there will be any changes for the company. Lin stressed that he is still in the management with 1.7 per cent stake. This is a positive sign," he added.
  
  TA Securities is placing a "Buy" on Gamuda shares, after Lin's sell-down, with a target price of RM5.
  
  Shares of Gamuda had surged more than 80 per cent after it won a RM12.5 billion deal to build the double-tracking railway project in a partnership with MMC Corp Bhd.