KUALA LUMPUR (Dec 11): Shares of Dagang NeXchange Bhd (KL:DNEX) climbed to their highest in four months amid high volume trade, following news of its joint venture (JV) with Gamuda Bhd (KL:GAMUDA) to provide Google Cloud services in Malaysia.
Dagang NeXchange rose as much as 17% or six sen to 41.5 sen, its highest since Aug 13. The stock was trading at 39.5 sen at 10.30am, giving the company a market capitalisation of RM1.4 billion. Trading volume totalled 91.55 million shares, nearly seven times the average of the past 100 days.
While investors were enthusiastic, analysts cautioned that the 50:50 JV between Dagang NeXchange and Gamuda would take time before contributing to their earnings. Gamuda also separately agreed to acquire 20% in Cloud Space Sdn Bhd, which provides Google Cloud services in Malaysia.
“Both of these ventures are still at an early stage,” said Phillip Capital, which covers Gamuda but does not rate Dagang NeXchange. “Nevertheless, we are positive on these developments,” the house noted.
Shares of Gamuda, meanwhile, were relatively steady at RM9.52 in usual volume on Wednesday morning, ahead of its quarterly financial results announcement on Thursday. The RM27 billion market-cap company has also scheduled an analyst briefing on Thursday.
For Gamuda, the investment risk would be low due to the relatively small outlay, while offering “potential for significant returns,” said Kenanga Investment Bank (Kenanga IB). “If successful, this could establish cloud and AI (artificial intelligence) as Gamuda’s third core business after construction and property.”
For now, Kenanga IB said it is maintaining its forecasts, “outperform” call on Gamuda, and a target price of RM10.80.
On their part, Gamuda and Dagang NeXchange said their JV company would be the sole provider of Google Distributed Cloud services, targeting the over RM11 billion market across government, including federal and state entities, as well as private organisations, such as financial service institutions and security-sensitive organisations.
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