Zelan Shares Jump On New Govt Contract

Zelan Shares Jump On New Govt Contract
The Star 

KUALA LUMPUR: Zelan Bhd shares rose as much as 7.5% in early trading, the biggest intraday gain in two weeks, after the company signed a 25-year concession agreement with the Government.

The stock rose three sen, or 6.4%, to 50 sen at the close yesterday. It reached an intraday high of 51 sen.

Analysts are bullish on Zelan's latest contract as it would boost the medium-sized contractor's earnings and provide it with a steady income flow during the concession period.

"The 25-year concession agreement could give an income stream estimated to be more than RM900mil," an analyst said.

He said that Zelan's revenue would continue to come from the order-book secured and the promising prospects of projects that the company was bidding for.

Another analyst expects the recognition from the latest contract to be more meaningful in the next two years.

Zelan is controlled by MMC Corp Bhd, with a 39.25% stake. The company posted a net profit of RM63.3mil on revenue of RM86.1mil for the third quarter ended Dec 31, 2011.

On Thursday, Zelan announced that its 95% subsidiary, Terminal Bersepadu Gombak Sdn Bhd (Tegas), has received a 25-year concession from the Government to undertake the development of the Gombak Integrated Transport Terminal (GITT).

It said Tegas would undertake the project on a build-lease-manage-operate-transfer basis via the public-private partnership.

The project would comprise a seven-storey terminal complex and related facilities, and would be sited next to the existing Gombak LRT station. Construction would take 27 months with a total cost of RM307.37mil.

Zelan said the Government had also awarded to Tegas the contract to undertake the upgrading of the Taman Melati road and the Middle Ring Road 2 to facilitate the smooth operation of the GITT.

It will be a major transportation hub to take over the existing operations of the east-bound intercity buses and taxis as well as those for Klang Valley. It would also serve as a temporary hub for the operations of the north-bound intercity buses and taxis, Zelan said.

In the event of Tegas completing the construction works, the Government would pay the company RM64.18mil within 30 days from the issuance of certificate of acceptance.

It would also pay RM3.11mil every month during the concession period for carrying out the construction, operating the facilities and for asset management services.

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