Stock Name: MMCCORP
Company Name: MMC CORPORATION BHD
Company Name: MMC CORPORATION BHD
| Research House: OSK | Price Call: TRADING BUY | Target Price: 3.70 |
Our trip to the MRTvisitor center and along the alignment of half of the Sungai Buloh-Kajangline was an eye opener as we got to see at eye level, the location of thestations and how the line would run. This rare insight gave us an appreciation ofthe route's passage through potentially high traffic areas such as colleges, commercialcenters and retail malls. We see the project progressing smoothly once the landacquisition issue is resolved as it is in the interest of all parties that theMRT gets off the ground. We maintain a Trading Buy call on MMC as the news flowon the company will continue to be strong.
An enlighteningvisit. Last week, we joined a site visit hosted by MMC at one of the KlangValley Mass Rapid Transit (MRT) visitor centers in TTDI Plaza. The visit was enlighteningas the centre was replete with information relating to the rationale for the MRT,its role in enhancing public transport in the Klang Valley as well as therelevant facts and figures on the transport system. Our hosts were En ZamriHasan, GM Public Relations, KV MRT and En Maslan Othman, MMC's Director ofProjects. After a briefing by En Maslan, we hopped on a bus which took us alongthe MRT alignment from Sungai Buloh up to the point where the line would gointo an underground tunnel in Semantan. Along the way, we were briefed on thelocation of the stations.
A well planned route.Unlike the LRT which winds its way through some under-utilised stations, theMRT's route seems well planned indeed, as its stations will be close to locationswhich will definitely generate heavy traffic such as SEGi College, HELP College,the Section 16 commercial center and Sunway Giza. The appointments of En Zamriand En Maslan on the MMC side of the MMC-Gamuda JV to handle the MRT job is aplus point as both gentlemen were previously instrumental inbuilding up Gas Malaysia to the successful company it is today. With anestimated 80% of the contracts likely to be awarded by July, the MRT's progress seems to be picking upsteam, especially with the arrival of the tunnel boring machines (TBM) due byyear-end. We see a project of this nature as unlikely to be derailedregardless of the outcome of the upcoming General Election.
Maintain Trading BUY.The emergence of a RM360m law suit filed by some prominent personalitiesseeking compensation from the Double Track Railway MMC-Gamuda JV for contractsnot awarded may raise some questions but we do not see this action coming to a quick resolution. Rather, we believe thecase may not have an eventual impact on MMC's bottomline. Meanwhile, there arerumours that the Gas Malaysia IPO may be further delayed and as such, may notmeet its 2Q2012 listing deadline although we remain confident it should belisted within 2012. As such, we maintain our Trading Buy call on MMC, with ourSOP fair value unchanged at RM3.70.
Source: OSK188
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