THE BUZZ  

Mudajaya announced on Bursa Malaysia yesterday that it has entered into a Memorandum of Understanding (MoU) with the government of Mandalay in Myanmar and Mr. Koon Yew Yin to facilitate the setting up of a coal-fired and solar-powered independent power plant in the region of Mandalay.

OUR TAKE  

More details on the MoU. According to its Bursa statement, Mudajaya will set up a special purpose vehicle and hold a 70% majority stake in the venture while the remaining 30% will be  held  by  Mr.  Koon  Yew  Yin.  A  chartered  engineer-turned-philanthropist  after  his retirement, Mr. Koon is no stranger to the local investing community, having founded Bursa Malaysia-listed IJM Corp when the company started off in 1966. Mudajaya added that it will prepare  a  feasibility  report  for  submission  to  the  Government  of  Mandalay  for  approval within the next nine months.

Growing  regional  presence.  The  announcement  was  within  our  expectation  as Mudajaya's management had, on various occasions, highlighted its intention of expanding its power presence in South-East Asia. That said, this piece of news is a  positive surprise since Mr. Koon's coming on board means that the venture would be able to benefit from his vast  experience  in  the  construction  industry  as  well  as  his  good  name,  which  we  believe may lend more credibility to the project.

TRADING BUY. While the capacity of the power plants was not disclosed, our checks with sources  indicate  that  this  may  likely  be  about  200MW-300MW.  Although  this  is comparatively  less  significant  than  the  capacity  at  Mudajaya's  existing  1,440MW Chhattisgarh  project  in  India,  we  are  encouraged  by  the  company's unwavering  focus  in establishing itself as a major power player in the region. We are making no changes to our forecasts  for  now.  Maintain  TRADING  BUY  on  Mudajaya,  with  our  SOP-based  FV unchanged at RM3.13.

Source: OSK