Ekovest’s shares slid 1.7% to close at 84.5 sen yesterday, while IWCity lost 1.5% to end the day’s trading at 96.5 sen
By SHAZNI ONG / Pic By BLOOMBERG
EKOVEST Bhd and Iskandar Waterfront City Bhd (IWCity) erased the gains reaped prior to the Bandar Malaysia project signing on Tuesday as profit-taking on the stocks prevailed.
Ekovest’s shares slid 1.7% or 1.5 sen to close at 84.5 sen yesterday, while IWCity lost 1.5% or 1.5 sen to end the day’s trading at 96.5 sen, leaving both companies with a market capitalisation of RM2.24 billion and RM808.08 million respectively.
In contrast, the FTSE Bursa Malaysia KLCI closed 1.4% or 22.16 points higher, driven by buying of banking stocks.
“We are not surprised to see minor retracements in the share price (of potential beneficiaries), on the account that investors opted to lock in their gains first,” MIDF Amanah Investment Bank Bhd analyst Muhammad Danial Abd Razak told The Malaysian Reserve.
The Bandar Malaysia project was revived on Tuesday with new conditions, following concerns that local contractors and resources would not participate in the multibillion project.
TRX City Sdn Bhd, the owner of Bandar Malaysia, and IWH-CREC Sdn Bhd signed a share sale agreement and a shareholders’ agreement that will see IWH-CREC buying a 60% stake in Bandar Malaysia Sdn Bhd — the master developer — from TRX City for RM7.41 billion.
TRX City is fully held by the Minister of Finance Inc, while IWH-CREC is a joint venture between Iskandar Waterfront Holdings Bhd (IWH) and China Railway Engineering Corp (CREC).
IWH is majority owned by tycoon Tan Sri Lim Kang Hoo, who also holds shares in Ekovest and IWCity.
Putrajaya is kick-starting the RM140 billion Bandar Malaysia development, two years after the project was put on the backburner.
The project will now include the construction of 10,000 units of subsidised affordable homes, as well as an 85-acre (3.4ha) park.
It will also see the reinstatement of the delayed Kuala Lumpur (KL)-Singapore high-speed rail (HSR), but at a reduced cost, said Prime Minister Tun Dr Mahathir Mohamad.
He said the government, which is currently reviewing the rail project, will proceed if some terms of the agreement can be amended.
On that note, MIDF’s Muhammad Danial expects newsflow to gather pace in the first half of next year, on anticipation that details on the HSR will be firmed up accordingly.
“Further announcement on the HSR is something to look forward to, as we approach the end of the suspension deadline in May 2020.
“What is becoming clearer now is that, the HSR project will likely come at a revised cost,” he said.
While the research house believes the Bandar Malaysia revival bodes well for the construction sector, it’s staying ‘Neutral’ on the industry, given the lack of details to quantify any positive assumptions.
“Given the size of this project, we believe more job opportunities will be up for grabs among construction companies,” Muhammad Danial said.
Ekovest and IWCity surged last Friday after IWH-CREC said a signing ceremony on the revival of the mega project would be held this week.
Ekovest jumped 11.7% to an eight-month high of 91 sen last Friday, while IWCity soared 12.7% to close at RM1.02, the highest since July 17 this year.
IWH and CREC as a consortium secured the rights to develop the 486-acre Bandar Malaysia back in 2015.
In May 2017, the deal was abruptly terminated following the unravelling of the 1Malaysia Development Bhd scandal.
Putrajaya revived the deal after what was deemed a “detoxification exercise” and resolutions of billions of debt related to the state-owned development fund.
Bandar Malaysia, which sits at the former airbase site located on the outskirts of KL, was mooted by the previous government. Its progress was hampered by issues over financing and securing the right developer.
The Bandar Malaysia Development Advisory Committee under the Ministry of Finance has renegotiated improved terms that ensure the project will truly benefit the country, said Finance Minister Lim Guan Eng.