Mudajaya is not out of the woods yet after slipping back into losses in 2Q with -RM78.0m. In 1H2016, the Group registered RM70.0m net loss due impairment of financial assets (-RM22.6m from Philippines wind farm) and losses from its Indian power plant (-RM61.3m) which was way below our and consensus full year estimates. As reported earlier, its 4x360MW power plant in India have already started commercial operations for 2 units and still waiting for the remaining 2 units. Pending further clarifications from Management, we keep our earnings and TP under review.

Outstanding orderbook. The Group’s orderbook is estimated at c.RM1.2bn (from c.1.0bn previously), with new contracts from Pengerang and Pan Borneo. Key revenue drivers currently are mainly from Pengerang and offshore equipment procurement works for its 40%-owned 62MW Wind Energy Farm in Cebu, Philippines. Tender book is primarily from the power industry (e.g. Tracks 3B & 4A, Pengerang, etc), MRT2 and LRT3.

Indian Power Plant. The huge losses were due to estimated depreciation of unit 1 & 2 which had achieved commercial operation date (COD) and interest expense that could not be capitalized after COD. Power sale is expected to commence only on October 2016. Hence, with no revenue currently, all costs have to be expensed for now. To recap, based on earlier guidance, the power plant was expected to generate c.RM70-80m p.a. once fully operational

Source: PublicInvest Research - 30 Aug 2016