HwangDBS raises MMC target price by 38%

by **Cals** Thu 06 Jun 2013, 15:34

HwangDBS raises MMC target price by 38%
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Thursday, 06 June 2013 15:05

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KUALA LUMPUR (June 6): HwangDBS Vickers has raised its target price on MMC CORPORATION BHD [] by RM1.35 or 37.5% to RM4.95.

Calling the company a “high conviction buy”, the research house elaborated in a note today that at the last closing price of RM2.65, MMC share price has been lagging and implying its land bank in Iskandar Malaysia comes free.

“Based on the market values of its listed entities, the market is assigning a residual value of RM1.4 billion for its CONSTRUCTION [], ports, water and Johor land bank. Putting this in perspective, even at a depressed land price of RM10 per square foot, with the most recent transacted price is RM25 to 30 psf), the land is worth RM2 billion,” said HwangDBS analyst Hwang Tjen San.

The analyst also said that MMC has often been overlooked by investors, which could be because it lacks coverage and possessing more complex businesses.

“This is not justified given its market cap of US$2.5 billion (RM7.72 billion), decent trading liquidity, order book of RM4 billion and strong pipeline ahead.”

For comparison’s sake, HwangDBS’s note said GAMUDA BHD []’s share price has been up 35% year to date while MMC only gained 2% in the same period. This is despite investors’ appetite for Malaysian infrastructure stocks picking up.

At 2:42 pm, MMC shares were up four sen or 1.51% to RM2.69. A total of 1.24 million shares changed hands