KUALA LUMPUR: Gamuda Bhd has the potential to replace Genting Malaysia as a KLCI constituent as the former's market capitalisation has risen to the 22nd position among eligible securities. CIMB Securities Sdn Bhd said Gamuda surpassed the eligibility cutoff of the 25th position on July 18.
According to Bloomberg market data as of July 18, 2024, Gamuda has climbed to the 22nd position in market capitalisation among eligible main market securities.
The KLCI constituent ground rules state that a security can gain entry into the KLCI if it rises to the 25th position or higher.
"Therefore, our analysis suggests that Gamuda could potentially be added to the KLCI index if the market cap ranking stays the same during the November 2024 review," it said in a note.
The entry is contingent on Gamuda maintaining its current market cap position of 25th or higher as at November 25, the cutoff date for the November index review.
Currently, the market cap gap between Gamuda and Hong Leong Financial Group, which is ranked 26th , stands at 16 per cent.
It said Genting currently has the lowest market capitalisation among KLCI constituents.
Apart from market capitalisation criteria, companies must have a free float of 15 per cent or more and pass a liquidity screening test to qualify for inclusion in the KLCI.
"At this juncture, we estimate that Gamuda (BUY, TP: RM9.30) could have a potential KLCI weightage of 3.3 per cent, against Genting Malaysia (BUY, TP: RM3.60) current weightage of 1.5 per cent," it said.
FTSE and Bursa Malaysia are set to announce the final results of the KLCI index review on Dec 5, 2024. Any changes to the KLCI constituents will take effect on Dec 23, 2024.