Mudajaya set to emerge main winner for power-plant construction, says CIMB Research

Mudajaya set to emerge main winner for power-plant construction, says CIMB Research
Business & Markets 2013
Written by theedgemalaysia.com
Friday, 02 August 2013 14:31

KUALA LUMPUR (Aug 2): CIMB Research has maintained its Outperform rating on MUDAJAYA GROUP BHD [] at RM2.66 with a target price of RM3.25 and said domestic power-plant CONSTRUCTION [] was coming back and Mudajaya was set to emerge as the main winner.

In a note Friday, the research house said investors should revisit this stock as newsflow on power-plant awards could be good in the next 6-12 months.

“Power-plant construction remains Mudajaya's key expertise.

“Being the only player actively bidding for power-plant work and having won major power-plant construction jobs in 2011-12, we believe its hit rate will be high. Its past experience of building 16 power plants locally is a plus,” it said.

CIMB Research said its target price was intact at a 40% discount to RNAV.

“Mudajaya is the dominant local power-plant contractor. Power-plant jobs make up 60% of its tender book. Maintain Outperform with catalysts to come from: 1) one likely power-plant award in 2H13; 2) FSA for its Indian IPP; and 3) regional power deals.

“It is cheap against its peers, at 5-7x CY13-14 P/E. Our forecasts are above consensus as we have factored in associate contributions from its Indian IPP, which should chip in full-year profits from FY15, and RM1 billion-RM1.5 billion of new jobs per annum. The signing of an Indian IPP FSA by end-2013 should lift the overhang in its share price,” it said.