George Kent’s share rises 30% on resumed LRT3 project

The PDP’s share price rose to RM1.29, the biggest day gain in over 14 years

By SHAHEERA AZNAM SHAH / Pic By TMR File

Investor confidence in George Kent (M) Bhd rose, following the government’s go-ahead to proceed with the Light Rail Transit Line 3 (LRT3) project at a reduced cost of RM16.63 billion.

The project delivery partner’s (PDP) share price rose 30%, or 30 sen, to RM1.29 at the close yesterday, the biggest day gain for the engineering company in over 14 years.

“The stock rebounded well on lower trading volume. Investors need to be careful as sellers may be looking for higher prices to exit,” a chartist said.

According to Bloomberg data, George Kent is trading at 6.1 times trailing 12-month earnings per share. The last two months had seen George Kent’s market capitalisation falling more than RM1.5 billion.

The engineering firm’s share price plunged from a 52-week high of RM4.47 to a low of 98 sen on Wednesday.

The LRT3 project went under the government’s scrutiny after its cost spiralled drastically from the initial RM9 billion agreed by the PDP contractors Malaysian Resources Corp Bhd-George Kent’s joint venture to above the RM31.65 billion mark claimed earlier.

Finance Minister Lim Guan Eng yesterday announced in a statement that the LRT3 project will resume at a 47% cost reduction to RM16.63 billion.

Lim said Prasarana Malaysia Bhd, a state-owned urban public transport operator, submitted the estimated cost of the project on Mar 30, 2018, which was about RM31.65 billion.

“On top of the initial RM10 billion granted in 2015 to finance the project, Prasarana sought an additional financing of RM22 billion in the form of government guarantees.

“The RM31.65 billion LRT3 project has been reduced by 47% to RM16.63 billion, saving Malaysians a total of RM15.02 billion,” he said in a statement.

He added that the cost will include land acquisition, project management, consultancy fees, operational and overhead costs, as well as interest during construction.

The LRT3 project, which began work in 2015, will span 37km within the Klang Valley, with Bandar Utama in Damansara and Johan Setia in Klang to be the end stations.

The initial construction cost, which was estimated at RM9 billion in 2015, had ballooned to over RM15 billion.