Mudajaya’s performance improved in 4QFY15 after netting RM16.2m from RM14.3m in the previous quarter. This is due to higher income from property development and forex gain. Ex-forex gain of RM7.9m, the Group’s full year performance is within our expectations but below the consensus. While positive, we believe it is not out of the woods yet as evident by the collapse in revenue, which was down -48% YoY due to slow jobs replenishment rate. More importantly, there is lack of clarify on the progress of its 4x360MW power plant in India with the earlier expectation that it is supposed to be fired up by mid-2015. All told, maintain Neutral with TP unchanged at RM1.00.

• Outstanding orderbook. The Group’s orderbook is estimated to be in excess of RM1.2bn, with the recent job wins in Pengerang. Key revenue drivers are mainly from MRT and offshore equipment procurement works for its 40%-owned 62MW Wind Energy Farm in Cebu, Philippines. Tender book is believed to be around c.RM8bn, primarily from the power industry (e.g. Tracks 3B & 4A, Pengerang, etc) worth c.RM1.5bn. Other jobs eyed include highways such as DASH and SUKE and MRT2.
• Indian Power Plant. Another year has passed with no new development from its power plant in India. More worryingly, it registered RM10.3m losses from associates in FY15 which we suspect mainly from the Indian power plant. Management still has not come up with new guidance on the commissioning of unit 1 of its power plant. As indicated earlier, we already discounted the earnings contribution from the power plant this year. It is disappointing to see that the Group failed to obtain the necessary approvals to fire up despite completing the unit since the beginning of the year. Recap that earlier guidance was at least two units will be fired up by end-2015 and the remaining by early 2016. Earnings are kept unchanged pending guidance from Management.
• Maintain Neutral and RM1.00 (pegged at 50% to its NTA). With no catalysts in sight and continued disappointment in completing its power plant, we believe that the Group is not out of the woods yet and will struggle to be profitable this year due to the lack of new jobs and depleting order book.

Source: PublicInvest Research - 26 Feb 2016