Hot Stock Mudajaya rises 7.6% on coal supply to its India IPP

by **Cals** Tue 10 Sep 2013, 16:19

Hot Stock Mudajaya rises 7.6% on coal supply to its India IPP
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Tuesday, 10 September 2013 15:42

KUALA LUMPUR (Sept 10): MUDAJAYA GROUP BHD [] saw its share price rise as high as 7.6% after announcing that it has secured a coal supply contract for its Indian independent power producer (IPP).

This came on the back of an agreement signed by Mudajaya’s wholly-owned unit RKM Powergen Pvt Ltd with India-based South Eastern Coalfields Ltd for the supply of coal for the next 20 years.

At 3.14 pm today, Mudajaya climbed 14 sen or 5.3% to RM2.77 per share, on trades of some 2.7 million shares. It had earlier hit a high of RM2.83, or 7.6% higher than yesterday’s close.

In a note today, CIMB Investment Bank Research said it has maintained ‘outperform’ call and raised its target price (TP) by 7.3% to RM3.24 on Mudajaya shares.

CIMB IB Research analyst Sharizan Rosely said he was positive about the progress made in securing coal supply as this should allay investor concerns triggered by numerous delays in the signing of coal supply since last year.

“This means that unit 1 is on target for testing and commissioning by end of this year and to start selling power by early next year, in line with our forecast,” said Sharizan.

“Looking ahead, we expect phase 2 to begin testing and commissioning in 1H14 and start selling power from 2H14 onwards.”

Meanwhile, Hong Leong Investment Bank Research’s analyst Jarod Soon said the overall progress of the plant is over 80% completed.

“Once fully operational, the IPP venture is estimated to contribute RM60-70 million per year, thus pushing Mudajaya a step closer to unlocking values for its India IPP power plant,” said Soon.

In addition, the group currently has a 700MW tie-up with Power Trading Corporation for 12 years.

“Negotiations are underway for revised power purchase agreement which will see Mudajaya tie-up all of its power generating capacity with longer tenure,” said Soon.