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MMC - 2Q12 results below expectation

kiasutrader
Publish date: Thu, 30 Aug 2012, 10:18 AM

Period    2Q12/1H12

Actual vs.  Expectations
 Below ours and the consensus expectations.

 1H12 core net profit of RM121m came in below ours and the consensus' FY12 full year estimates of RM343m and RM360m respectively. Our core net profit is derived after stripping out the RM750m exceptional gain from the disposal and fair value of  Gas Malaysia Bhd (GMB) while adding back the provision for its Jazan project and group's provision of c.RM90m. 

Dividends  No dividend was declared during the quarter.

Key Result Highlights
 For 1H12,  the revenue increased marginally by 1% but core net profit rose by 48% due to better contribution from its associates and the construction division especially Zelan, which had narrowed its losses. 

 QoQ, the core net profit jumped by more than 216% due to the strong rebound in associate contribution, which increased by 235%. This was also supported by the higher margin from its transport division, especially PTP, which saw its container throughput increased by 4.6%.   

Outlook   We believe that MMC will be in the front line to acquire more new assets i.e. KTMB and to benefit from ETP-based project rollouts in the near term.

Change to Forecasts
 We are keeping our forecasts unchanged at this juncture, as we expect the earnings to be better in 2H12, due partially to seasonal factors. 

Rating  Maintain OUTPERFORM

 Maintain OUTPERFORM as we expect the share price to react to positive news on MMC i.e. the acquisition of KTMB and other assets acquisition.

Valuation    We maintain our fair value at RM3.11 based on SoP valuation.

Risks   Delays in the construction of MRT works and late delivery of MRT's TBM (Tunnel Boring Machine).

Source: Kenanga 
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