Mudajaya Group
Rapid job win gives temporary reprieve
■ Mudajaya has won a sizeable EPCC contract for Petronas's Rapid.
■ The RM489m contract is a positive surprise in terms of value, but in line with EPS
forecasts.
■ Sustained recovery in order wins beyond 2015 remains uncertain.
■ Upgrade to Hold but prefer Muhibbah Engineering for bigger exposure to Rapid.
RM489.4m new EPCC contract for Petronas's Rapid
Mudajaya was awarded an engineering, procurement, construction and commissioning
(EPCC) contract to undertake the construction of a workers’ village and temporary
construction facilities for the Utilities, Interconnecting and Offsite (UIO) facilities for
Petronas's Rapid project. The job was awarded by PRPC Sdn Bhd, a subsidiary of
Petronas, and is scheduled for completion by mid-May 2017 (1.5 years). This is a
notable development for Mudajaya as it is the group's first contract award in 2015.
Positive surprise in terms of value, but neutral to EPS
This award is a positive surprise for its size and scale, but relatively neutral in terms of
impact to EPS forecasts – we project RM500m in total contract wins for FY15. This job
substantially increases the group’s massively-depleting outstanding order book of
c.RM150m (our estimate) as at 2Q15 by more than threefold to RM639m. While this
provides a temporary reprieve, the catch here is that the new order book level would not
last more than 1.5 years, given the annualised 1H15 burn-rate of RM450m.
Joining the league of Rapid contractors raises its profile
Mudajaya joins the league of a handful of contractors which have won specialised
packages in Rapid (see table overleaf), raising its profile as it diversifies its civil
engineering experience into downstream oil & gas construction. The EPCC nature of the
contract could translate to slightly higher pretax margins of 6-7% compared to pure-open
tender infra job’s 4-5%. We estimate net profit contribution of RM10m-14m p.a. based
on a 6% pretax margin assumption; supporting our forecast of a recovery in FY16.
But 6-9 months order book visibility still weak
This development does not totally mitigate risks of sustained earnings weakness
following its core net loss of RM32m in 1H15, though the 3-month contribution from this
new job should prevent the group from reporting losses for the full-year. Our concerns
on weak tender visibility going into 2016 remain unchanged as most of the potential
awards for the sector in the next 6-9 months are unlikely to be sizeable for Mudajaya
and falls outside of its expertise in power plant construction and highways.
Upgrade to Hold; good news largely in the price
We raise our RNAV-based target price as we narrow our discount from 50% to 40% to
reflect the stock's medium-term sentiment recovery. We upgrade our call from reduce to
Hold. Limited new catalysts ahead (beyond this new contract award) suggest a slim
scope for a further re-rating for the stock, up 18% since end-Aug. Switch to Muhibbah
Engineering for a bigger exposure to Rapid and US$-play.

no CIMB UPGRADE IT TO HOLD FROM SELL,,FOR TIME BEING OK MA

yes they got local project from rapid,, costing 489 million..i told it was related something local not the powerplant firing..but if it fires then much better ha

Posted by 913791 > Sep 9, 2015 08:10 AM | Report Abuse

Good morning DATASONIC, even l walk through a valley of deep darkness, l never afraid because I have faith in you.All the best DATASONIC!


VALLEY OF DARKNESS IS AFTER DEATH MA, THERE IS NO DATASONIC THERE?? hi hi hi

it is going to settle at 1.00,, won t go high cause cimb target price is 1.32 at the moment,,, last time was 2.0,,being downgraded very fast ripples effects from china ha

I am searching for news for today surge, but not getting anything.. I do not think it is the firing but something else. Even analyst cimb also told the delay will also take place in 2016.. but who knows sometimes miracles do happen.. I think they are going to get some local projects..

what anto and james wong, james bond are doing??

new CIMB TARGET PRICE 0.70 FROM 0.88..

Running low on profits
Mudajaya reported a 1H15 core net loss vs. our and consensus full-year
forecasts of RM30m-50m net profit. This was a negative surprise and likely
due to job delays and cost overruns on top of a depleting order book. With no
recovery in job flows YTD, its earnings outlook remains weak. This is unlikely
to be mitigated by the Indian IPP earnings. While 2H15 could still be
supported by the estimated balance order book of c.RM150m, our cuts to
FY15-16 EPS forecasts of 35-70% also reflect further delays in new associate
earnings from the Indian IPP. Our target price falls as we update for balance
sheet items (still 50% RNAV discount). Maintain Reduce, with 2H15 losses and
a depleting order book as key de-rating catalysts. Switch to Gamuda.
1H15 slipped into losses
The 1H15 core net loss was below expectations, compared to our and consensus
full-year net profit forecasts of RM30m-50m. The main deviation was the
RM23m operating losses for construction, mainly due to a depleting order book.
The sharp 159% drop in 1H15's construction EBIT may also be due to sustained
cost overruns and job delays. The absence of dividends was expected.
Order book running low
Mudajaya's outstanding order book is running low, estimated at c.RM150m
currently compared to over RM1bn 12 months ago. The company could still
secure other smaller contracts in 2H15 but it may not be able to achieve the
targeted RM500m total wins for this year. The persistent delays in the
commissioning of the 26%-owned 1,440MW coal-fired power plant in
Chhattisgarh, India, could further delay earnings recovery due to the absence of
new associate income. Going by indications that the original power purchase
agreement (PPA) with the state electricity board could be revised, there is still
the risk that Mudajaya fails to fire up its power within 1H16.
Lack of a silver lining
We believe Mudajaya's road to recovery could be protracted, dragged by a less
aggressive strategy to turn around its property and construction divisions and
the longer gestation period for its smaller IPP ventures in the region to make
meaningful contributions to profit. If order wins do not recover over the next
6-9 months, there is further downside to our assumed total wins targets of
RM1bn for FY16 and RM800m for FY17.

yesterday cimb drop the target price to 1.75, and today also drop to 1.32.. wow why like this

target price of CIMB drop again to 1.32 from 1.75..

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miracles can happen who knows ha

it s not a crash, but deep correction

IFCA NEW TARGET PRICE BY CIMB 1.75 FROM 2.04

Close to major support levels
Correction has been sharp for this stock since the end-May peak. The 78.6%
retracement level for the stock stands at RM0.45 and this should represent a
major support for the stock. The daily MACD is showing positive divergence
signs and the breakout of the daily RSI resistance trend-line should be bullish
for the stock, at least in the immediate term.

Feeling the GST blues
At 80% of our full-year forecast, IFCA’s annualised 1H15 net profit was below
our expectations on slowing sales in both the China and domestic markets. We
cut our FY15-17 EPS forecasts by 9-20% to reflect the slower growth outlook in
both markets, resulting in a lower target price that is still based on 21x FY16
P/E (in line with domestic peers). The stock remains an Add as the valuation is
attractive at 2015 11x P/E following the sharp share price decline. Ex-cash P/E
is only 9x. Catalysts include concluding the Indonesia distributor acquisition,
and the successful implementation of its e-commerce platform.
1H15 net profit up 353%
IFCA’s revenue was up 75% yoy while net profit growth was higher by 353%. No
interim DPS was declared, in line with our expectations. 1H15’s revenue was
much higher mainly due to GST software upgrades for the domestic developers.
The higher 1H15 net profit growth was mainly due to its high operating leverage
business.
Slower China and domestic market outlook
Market conditions have deteriorated significantly in both the China and
domestic markets over the past 1-2 quarters. Domestic property developers are
still getting used to GST implementation from Apr onwards, but the sector’s
sentiment is also hit by the weak ringgit. In China, the stock markets continue
to correct and this major economy is hinting at signs of weakness with the
recent devaluation of the yuan.
Launch of e-commerce platform soon
In 4Q15, IFCA will be launching its new e-commerce platform. The new
e-commerce platform (Ez) can link customers’ front-end and back-end
infrastructure, allowing any potential online customer to book a property unit
and also pay the deposit online. Domestically, no platform currently allows a
buyer to do this. This platform will also allow developers, agents and customers
to communicate with each other, integrating technology into the property
sector. By early 2016, the company should also have completed the acquisition
of its Indonesian distributor. Its Indonesia customers are all still on the
Windows-based platform and it is likely management would launch the
mobile-based platform and also Service as a Software (SaaS) in this country in
2016. The company will hold its 2Q15 briefing on Wednesday.

SO SLOW like siput sendut

no source available to make profit..

CIMB NEW TARGET PRICE 0.88 FROM 1.22... still the risk that mudajaya fails to fire up its power within 1H16... THIS IS BAD GUYS

Depressed by uncertainties
Despite Mudajaya's low valuations, we fail to see any silver lining over
the months ahead. The depleting order book without more wins YTD
only means more downside risks to earnings. This is on top of the
further delays in the commissioning of the Indian IPP.
We retain our EPS forecasts but flag
downside risks to earnings if progress
billings substantially weaken in the
quarters ahead. We cut our target
price as we raise the RNAV discount
from 40% to 50% to reflect the
deteriorating outlook and lack of
catalysts in the medium term.
Maintain Reduce. Switch to Gamuda.
Weaker job visibility
Mudajaya's outstanding order book is
running low, estimated to be
c.RM600m compared to over RM1bn
12 months ago. YTD, there has been
very little news about the RM5bn in
total domestic jobs the company has
been targeting for. Management
concurred with our view that the main
reason for this was that the bulk of the
tender book comprised of highway
and power plant projects, which are
being delayed. This ties in with our
analysis that progress in these two
segments will only be seen sometime
in the later part of 2016. The company
could still secure other smaller
contracts but it may not be able to
achieve the targeted RM500m total
wins for this year. The depleting order
book and risk of further delays in
getting new jobs underpin our 9% EPS
decline for FY16. Our RM1bn total
wins target for FY16 and RM800m
assumed for FY17 look untenable.
Delayed new associate
income
The persistent delays in the
commissioning of the 26%-owned
1,440MW coal-fired power plant in
Chhattisgarh, India, could further
delay earnings recovery due to the
absence of new associate income.
Although a temporary solution to the
logistics of transporting coal was
achieved, there were indications that
the original power purchase
agreement (PPA) with the state
electricity board could be revised. In
our view, there is still the risk that
Mudajaya fails to fire up its power
within 1H16.
Lack of a silver lining
At this juncture, we believe
Mudajaya's journey towards recovery
could take a detour, dragged by a less
aggressive strategy to turn around its
property division and the longer
gestation period required for its
smaller IPP ventures in the region to
make meaningful contributions to
profit.

FEAR and distructive forces are working in the mind..not constructive forces

LOOKS LIKE YOU SOLD EVERYTHING ALREADY,, NO WONDER YOU ARE TALKING LIKE THIS

now cimb target price is 2.04 if not mistaken

earning report coming not so good... CIMB might downgrade target price by 15----to---20 percent

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why evergreen n HEVEA not mentioned??

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uncle k is gaining slowly his popularity at i3 site

Yes good idea 400523, just sell assets but how much shareholders can get?

delays games again

already time for JIBBY to step down

JIBBY should step down, already loosing his respect from the public...country becoming a laughing subject by foreigners

it s not a global probelm, but just a domestic one...

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CIMB TARGET PRICE AT THE MOMENT IS 2.04... BUT AFTER EARNING REPORT IT WILL BE ADJUSTED LOWER 15 TO 20 PERCENT.. PLEASE TAKE NOTE.. NEW TARGET PRICE WILL BE ARROUND 1.50 TO 1.60... THERE IS A SLOWDOWN BUT FUNDAMENTALS ARE STILL STRONG

Why suddenly today you are talking about ASDION, KCCHONG? Why not few weeks ago?

they had taken out the report at wrong time,, when stock had already bottom up.. not fair to retail investors. actually should had taken out earlier, so that retail investors can make a decision.

target by cimb still at 2.04 funny ha at last truth came out but at the WRONG TIME,, when stock already bottom up, then only they came out with the above report.. not helpfull to retail investors, who got stuck at higher price

Positive divergence?
IFCA’s share price is looking to test its major support trendline at the RM0.80
level. Two months ago, the stock reached as low as RM0.79 before the rebound.
Daily MACD and RSI show potential divergence signs, an indication that the
stock should find support soon.

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Posted by hockhuat > Aug 5, 2015 08:44 AM | Report Abuse

JOHNNY CASH IS LIKE THAT...WHEN HE NOT ENOUGH CASH ...THEN HE WILL START UPGRADING THE STOCK, MANY TIMES HAPPEN TO OTHER STOCKS ALSO

my fren are you ok?? i mean stable?

KENANGA IS ALWAYS LIKE THAT WHEN THEY MISS THE BOAT,, THEN THEY WILL START DOWNGRADING THE STOCK, MANY TIMES HAPPEN TO OTHER STOCKS ALSO

visit a doctor fast please

Mr. Jupiter,,,ok we wait

NEUTRAL NOW,,,PREVIOUSLY A BUY

RHB GAVE REVISED TARGET PRICE OF 1.22,,, FROM 1.29...

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