KUALA LUMPUR: Gamuda Bhd has received an offer to sell its stakes in four highway concessions for RM2.3 billion.
Describing the offer as "irresistible", Kenanga Research said the RM2.3 billion was higher than its estimated valuation of RM2.1 billion.
Kenanga Research is positive of the deal as Gamuda will be able to absolve itself from traffic volume risks should govrnment halt compensation.
The firm said Gamuda was expected to gain RM1.0 billion from the deal and turn net cash of RM0.6 billion post-deal.
As of the second quarter (Q2) of financial year 2022 (FY22), Gamuda sat on net debt of RM1.7 billion.
Kenanga Research said the deal has a high probability of success and would not face as much backlash compared to the deal offered by the Ministry of Finance back in 2019.
"This is mainly because the government is not a party to this transaction unlike the last deal which they were required to provide government guarantees.
"Also, this deal saves the government RM4.3 billion worth of toll compensations required for the rest of these four concessions and the public gets to enjoy flat toll charges throughout the tolls' remaining tenure," it added.
Amanat Lebuhraya Rakyat Bhd, a not-for-profit private company, has proposed to acquire completely four tolled highways in which Gamuda has stakes in, at an enterprise value of RM5.48 billion.
Gamuda owns a 70 per cent stake in Kesas highway, 43.2 per cent in Litrak, 20 per cent in Sprint and 50 per cent in Smart.
"Timeline of sale is expected within the next four months but management is targeting to have it sealed within three months (end-June 2022)," Kenanga Research said.
Post-deal, Kenanga Research has reduced Gamuda's FY23 earnings by 27 per cent after accounting for the loss of contributions from these four tolled highways partially offset by some interest savings from reduced borrowings.
The firm has maintained its "Outperform" call on Gamuda with an unchanged target price of RM4.