Mudajaya announced that it has accepted a Letter of Award from TP Sepang SB, a company under Tune Group, to construct a Tune Hotel near KLIA in Sepang, Selangor for a total sum of RM65m. The project is expected to be completed by November 2013.

Slightly positive. The contract involves the construction of a 400-room hotel with a pedestrian walkway as well as other related facilities. We believe that the hotel is intended to cater to the upcoming low-cost carrier terminal, KLIA2. While Mudajaya's management had previously highlighted the possibility of bagging this job, the announcement was a small but positive surprise as we did not expect any new job wins for the remainder of the year.

RM1.9bn worth of new jobs secured YTD. With this contract now in the bag, Mudajaya would have secured more than RM1.9bn worth of new jobs YTD. Taking this new contribution into account bumps up our FY13 net profit forecast by 3.0% to RM323.7m while our FY12 and FY14 numbers are unchanged.

NEUTRAL. All in, while we are positive on the surprise contract win, we maintain NEUTRAL on Mudajaya for now, with our SOP-based FV unchanged at RM2.88, pegged to our FY12 forecast. We have yet to roll forward our valuation to FY13 pending the outcome of ongoing negotiations between India's Ministry of Coal and Ministry of Power, which we believe could pave the way for the long-awaited signing of the fuel supply agreements between Mudajaya's 26%-owned associate RKM Powergen and Coal India Ltd.

Source: OSK