Stock Name: MUDAJYA
Company Name: MUDAJAYA GROUP BHD
Research House: CIMB
Mudajaya Group Bhd
(March 21, RM4.80)
Maintain 'buy' at RM4.60 with target price of RM7.94: We continue to be optimistic about Mudajaya's prospects for 2011, which are now underpinned by more certainty in the rollout of power plant extension jobs and implementation of the Sungai Buloh-Kajang mass rapid transit (MRT) line and light rail transit extensions. A bonus would be success in clinching regional power plant ventures which would be long-term positive for the group.
The stock is trading at a hefty discount of 54% to its RNAV compared with 33%-47% discounts for other construction stocks under our coverage. On P/E basis, it is also cheap at CY11-12 P/Es of 6-7 times compared with the construction sector average of 16-20 times.
We maintain our EPS forecasts, 'buy' call and target price of RM7.94, pegged to an unchanged 20% RNAV discount. The award of projects holds the key to share price re-rating.
Mudajaya has teamed up with Alstom to bid for the Janamanjung power plant extension which is targeted to be awarded by the end of the month.
We continue to believe that Mudajaya has an advantage over other local contenders, having been the big beneficiary of Tenaga Nasional Bhd's power plant capex in the past. Its strong balance sheet and track record add to its credibility as a contender.
The civil works for the Sungai Buloh-Kajang MRT Line will be dished out in packages. Award is expected in May and work targeted to start in July. Mudajaya meets the prequalification criteria, having built the KLIA spurline. Even at the subcontracting level, the group is open to opportunities in the precast segment.
We are looking at up to RM3.1 billion worth of potential jobs for the group, which would raise its order book to almost RM8 billion.
Mudajaya recently announced a 1-for-3 bonus issue, which is expected to be completed in 3QCY11. This is positive for shareholders as it will improve liquidity. Also, share prices typically do not adjust fully after they go ex of bonus issues. The group also announced its maiden employee share option scheme. ' CIMB Research, March 21
This article appeared in The Edge Financial Daily, March 22, 2011.
Company Name: MUDAJAYA GROUP BHD
Research House: CIMB
Mudajaya Group Bhd
(March 21, RM4.80)
Maintain 'buy' at RM4.60 with target price of RM7.94: We continue to be optimistic about Mudajaya's prospects for 2011, which are now underpinned by more certainty in the rollout of power plant extension jobs and implementation of the Sungai Buloh-Kajang mass rapid transit (MRT) line and light rail transit extensions. A bonus would be success in clinching regional power plant ventures which would be long-term positive for the group.
The stock is trading at a hefty discount of 54% to its RNAV compared with 33%-47% discounts for other construction stocks under our coverage. On P/E basis, it is also cheap at CY11-12 P/Es of 6-7 times compared with the construction sector average of 16-20 times.
We maintain our EPS forecasts, 'buy' call and target price of RM7.94, pegged to an unchanged 20% RNAV discount. The award of projects holds the key to share price re-rating.
Mudajaya has teamed up with Alstom to bid for the Janamanjung power plant extension which is targeted to be awarded by the end of the month.
We continue to believe that Mudajaya has an advantage over other local contenders, having been the big beneficiary of Tenaga Nasional Bhd's power plant capex in the past. Its strong balance sheet and track record add to its credibility as a contender.
The civil works for the Sungai Buloh-Kajang MRT Line will be dished out in packages. Award is expected in May and work targeted to start in July. Mudajaya meets the prequalification criteria, having built the KLIA spurline. Even at the subcontracting level, the group is open to opportunities in the precast segment.
We are looking at up to RM3.1 billion worth of potential jobs for the group, which would raise its order book to almost RM8 billion.
Mudajaya recently announced a 1-for-3 bonus issue, which is expected to be completed in 3QCY11. This is positive for shareholders as it will improve liquidity. Also, share prices typically do not adjust fully after they go ex of bonus issues. The group also announced its maiden employee share option scheme. ' CIMB Research, March 21
This article appeared in The Edge Financial Daily, March 22, 2011.
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