Perak, PR, BN and Gamuda - It’s all about Business, Stupid
Dubai is probably the best yardstick to measure the economy of the Gulf region; at least Dubai was the most prosperous city within the region. People might not know where Oman is but they can’t miss Dubai. For years people have been flocking to this city hunting for their first pot of gold. As with the normal cycle property market was booming with tons of first-time speculators snapping up properties as if they were buying tiramisu cakes. Money was stretched to the limit in order to buy maximum number of properties possible. These properties would then be rented out without much problem, thanks to the booming economy, and thus generating positive cash-flow. It was a no-brainer method to generate wealth until now.
Now that the property bubble has burst, thanks to global economy recession, these novice speculators are selling their once-cash-cow to anybody at fire-sale discount. Effectively most of Malaysian construction companies were crying as projects agreed got hold or cancelled. Gamuda Berhad (KLSE: GAMUDA, stock-code 5398), the country’s largest construction and engineering with interests in construction, water, toll and property development is feeling the heat (7% of Gamuda's outstanding order book comes from the Gulf region) after the WCT Berhad and Meydan LCC joint venture to build a RM4.6 billion race-course in Dubai was cancelled. Gamuda generated investors’ interest recently when the founder and Managing Director Lin Yun Ling cashed-out early 2008 sending the stock price to the south.
Another interesting fact about Gamuda - the largest shareholder is also the second richest woman on the 2008 Forbes 40 Richest Malaysians at #35 spot. She is Raja Datuk Seri Eleena Raja Azlan Shah, the daughter of the Sultan of Perak, Raja Azlan Shah. She was worth RM773 Million ($228 Million) at #25 spot in 2007’s 40 Richest Malaysians but this figure dropped to RM510 Million ($150 Million) in 2008 at #35 spot. Based on today’s stock price of RM1.91 a share her fortune is only at RM287.46 million based on her remaining stake of 7.5% in Gamuda via Generasi Setia (M) Sdn Berhad. Naturally when his father refused to dissolve the state assembly for a fresh election various rumors and speculations began its circulation.
Malaysian politics is perhaps the dirtiest but you can’t blame the public to have a perception that the federal government was twisting the arms of the Sultan (silly assumption, is it not?). However on the business perspective you do not need to wake Einstein up from his grave to tell you that Gamuda is basically at the mercy of the Federal government. With water taps closed by the federal government to three of the most developed states, Selangor, Perak and Penang, Gamuda is screaming for projects. Certainly the nation has the money. In fact the country is flushed with more money than before the Mar 2008 general election simply because the federal government does not know where to pump the money to since the most developed states such as Selangor, Perak (was) and Penang are controlled by opposition parties.
PM-in-waiting Najib Razak is set to take over the premiership end of Mar 2009 so expect more goodies and good news (lower electricity tariff soon?). The first RM7 billion stimulus package may have been “well spent” into certain pockets already. Najib’s mentor, former dictator Mahathir, has hinted that the second stimulus package should be about RM35 billion or 5% of the country’s GDP (gross domestic product) so you can expect the figure to be announced by Najib. Whether this whopping RM35 billion will go into stock market or projects everyone is drooling for a piece of the cake – including Gamuda. Hmm, Najib may be right after all that the country may not enter recession. So, is it good time to accumulate some Gamuda shares *grin*?
Anyway let’s imagine (it’s Friday dude) a conspiracy theory and this Perak crisis is just the tip of an iceberg. Let’s assume Anwar has the number to take over the federal government but at the same time he’s also aware that to do so could backfire badly. He needs to start the ball-rolling and he announced about the defection, 916 and so forth. After Permatang Pauh and Kuala Terengganu, he knew Najib is desperate for trophies so the plot was to sacrifice Perak. He accepted the bait (was it?) offered by Najib with this fella Nasarudin. A good strategy to test water (effect of defections) and to flush out traitors within PKR, Perak has to fall to BN. Now Najib has gotten Perak State as the trophy to show off during the coming UMNO election and claimed it was Anwar who started the defection plan and he simply finished it. The next episode will see that Anwar will snatch the federal government with the readied defectors while screaming “Najib started the battle so I'm just finishing the war”. What a wet dream!
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