Results

FY13 PATAMI of RM25.1m came in within expectations, accounting for 23.8% of our full year forecasts. Against consensus, Mudajaya’s PATAMI came slightly shy of consensus, accounting for 21.3% of full year forecasts.

Deviations

None.

Dividends

None.

Highlights

Qoq review… 1Q revenue grew by 9.6% yoy to RM366.7m largely attributed to the growth from construction segment (+15%) coupled with maiden RM1.4m contribution from its 5MW energy generating plant in Gebeng, Pahang. PATAMI’s growth came in on par with revenue growth as margins were sustained at 4QFY13 levels.

Yoy review… Revenue declined 3% due to contraction across the board: Construction segment (-1.3%); Manufacturing segment (-7.5%); Trading segment (-9.1%) and Property development segment (-17.5%). As a result of lower margins and decline in revenue, PATAMI fell further by 40.5% to RM25.1m (4.5 sen/share).

Earnings visibility… Outstanding order book of close to RM1bn, translating to ~0.74x FY13’s construction revenue and ~0.74x order book-to-market cap ratio.

Prospects… Mudajaya is well-placed to benefit from the expected launches of mega-infrastructure projects by the Government and private sector.

In addition, the group is currently in the process of acquiring companies involved in a wind energy project in Philippines and a coal-fired power project in Indonesia. Mudajaya is also bidding for a few coal-fired power plant projects within the region.

Risks

• Delay in completing the India IPP project
• Regulatory and political risk (both local and abroad)
• Rising raw material prices
• Unexpected downturn in the construction sector
• Sharp depreciation in the Indian Rupee.

Forecasts

Unchanged.

Rating

BUY

• One of the catalysts for the group would be the successful test firing of its India IPP.
• We are reiterating our BUY call on Mudajaya as we believe that the company is able to successfully replenish its order book and commission the India power plant.

Valuation

TP of RM3.53 based on SOP valuation and BUY recommendations are maintained (see Figure #2).

Source: Hong Leong Investment Bank Research - 28 May 2014