Hong Leong keeps ‘buy’ for Mudajaya, upcoming commission of India IPP

by **Cals** Wed 16 Oct 2013, 13:54

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 16 October 2013 11:14

KUALA LUMPUR (Oct 16): Hong Leong Investment Bank Research has reiterated its ‘buy’ call on Mudajaya Group Bhd at RM2.93. with target price (TP) of RM3.53, in light of the upcoming commissioning of the Mudajaya’s India independent power plant (IPP).

In a note today, the research house said it sees Mudajaya’s progress towards commissioning its power plant successfully.

Hong Leong IB research analyst Jarod Soon said he maintained TP of RM3.53, which is based on sum of parts valuation.

“Mudajaya’s progress will unlock its value and we are positive on the potential contract wins collectively worth RM3.2 billion,” said Soon.

“The success in commissioning Phase 1 will see another round of positive reaction in Mudajaya’s share price. It will be the inflection point to fully unlock its value in the India IPP venture.”

Soon said he estimated the group has RM3.2 billion -RM3.9 billion worth of prospects to replenish its order book. Its existing order in hands stands at RM1.7 billion, he said, which translates to 1.1 times FY12 construction revenue.

Meanwhile, Soon also highlighted media reports saying Mudajaya is a strong contender for various infrastructure projects.

“The group is a strong contender for the Subang Skypark railway link worth RM1.3 billion-RM1.5 billion and the Central Spine Highway (Kota Bahru-Kuala Krai) worth RM1.2 billion -RM1.6 billion,” he said.