Mudajaya favourite to land RM1.7b-RM2.2b civil works job if 1MDB bags deal

by **Cals** Tue 25 Feb 2014, 07:45

[size=32.22222137451172]Mudajaya favourite to land RM1.7b-RM2.2b civil works job if 1MDB bags deal[/size]

[size=14.44444465637207][size=14.44444465637207][size=13.333333969116211]Posted on 25 February 2014 - 05:36am
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[size=14.44444465637207]PETALING JAYA (Feb 25, 2014): Mudajaya Group Bhd is said to be the frontrunner to clinch civil works estimated at RM1.7 billion to RM2.2 billion for a power project which 1Malaysia Development Bhd (1MDB) is rumoured to be the winning bidder.[/size]

[size=14.44444465637207]Alliance Research said, if the rumour is true, Mudajaya stands to be on the preferred company for civil works as it has been "supporting" 1MDB's bid for the 2,000 megawatt coal-fired power plant project called Project 3B.[/size]

[size=14.44444465637207]Its analyst Jeremy Goh learnt that should 1MDB win the bid for Project 3B, a consortium of Japanese and Korean firms will undertake the lead EPCC role for the plant.[/size]

[size=14.44444465637207]"Our sources also revealed that Mudajaya has been 'supporting' 1MDB on the bid and working closely with both 1MDB and the EPCC consortium to undertake the civil works for Project 3B," he said.[/size]

[size=14.44444465637207]From the reported value of RM11 billion for Project 3B, Goh estimated that the civil works contract could be worth RM1.65 billion to RM2.2 billion, based on 15%-20% of the total project sum.[/size]

[size=14.44444465637207]He noted that Mudajaya's order book replenishment has been rather quiet with no new awards in 2013 as it was conserving resources for more sizeable, higher margin jobs.[/size]

[size=14.44444465637207]"Bagging the civil works for Project 3B would provide a significant boost to its orderbook, more than doubling it from the current RM1.2 billion to RM2.9 billion to RM3.4 billion," he said.[/size]

[size=14.44444465637207]Mudajaya has a strong track record with power plant civil works and is currently undertaking the Janamanjung 4 power station (worth RM720 million) and Tanjung Bin coal-fired plant extension (RM1 billion).[/size]

[size=14.44444465637207]Aside from Project 3B, potential orderbook replenishment for Mudajaya could also come from civil works for Janamanjung 5 (valued at RM750 million to RM1 billion) and a land swap deal involving army facilities (RM250 million).[/size]

[size=14.44444465637207]Alliance had cut Mudajaya's FY13 earnings by 4% to reflect its poor orderbook replenishment estimated at RM750 million for that year but said there could be upside to FY14-15 earnings if Mudajaya bags the civil works for Project 3B.[/size]

[size=14.44444465637207]"As 1MDB is not listed, Mudajaya offers an excellent proxy to ride on the award of Project 3B theme. We reckon that this will be the key catalyst to reignite interest in Mudajaya," Goh said.[/size]

[size=14.44444465637207]With a strong catalyst on the cards for Mudajaya, Goh raise Mudajaya target price to RM3.62 from RM3.26.[/size]

[size=14.44444465637207]"This implies FY14-15 price-to-earnings ratio of 8.3 times and 7.7 times respectively," said Goh, who maintained a "buy" recommendation on the stock.[/size]
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