Just the loss for the quarter is realized, not all. It does not go into detail. If the company thinks the project is a loss, the entire loss should be recognized, but considering how long its fallen, its not.
Second bit, interest cost that was incurred after COD (Confirmed Operating Date) cannot be capitalized, so you'd see a bigger drop in profit basically. But the plant should be operating then, so it might be offset-ted by the revenue or profit (if any).
The end of Mudajaya is near. I read so many quarterly reports and not once the management mentioned about the power plant in India. And in this latest quarterly report, the management finally come clean with the White Elephant, providing investors with a generous share of what really happened in the land north. To me, this implies that the management knows the project in India is really out of control from now on. Now, I think the management is just trying to protect the rice bowl. Revealing so much information regarding the India project only tell us that the management is looking for a scapegoat.
I really pity the shareholders here. So much value was destroyed by the incapable management at the top. If I were an Malaysian institutional fund like EPF or KWAP, I will start approaching their management to negotiate whether they like to sell their office tower located in a prime location.
the bright spot in 9M16 was the 41% on-year growth in construction revenue on the back of an RM1.3bil outstanding order book, which included the RM1.3bil Pan Borneo Sarawak package to the Musyati-Mudajaya JV.
The stock depreciated 32% in the past 12 months. What could emerge as a silver lining is better success rate for its tender book, which comprises an MRT 2 package, new building jobs, various road projects in Penang, potential new domestic solar farm venture, and potential variation order claims for its existing contract in Petronas’s refinery and petrochemical integrated development project.
“Based on our blue skies scenario estimate, it could secure up to RM800mil in new jobs in the medium term,” it said.
The stock depreciated 32% in the past 12 months. What could emerge as a silver lining is better success rate for its tender book, which comprises an MRT 2 package, new building jobs, various road projects in Penang, potential new domestic solar farm venture, and potential variation order claims for its existing contract in Petronas’s refinery and petrochemical integrated development project.
“Based on our blue skies scenario estimate, it could secure up to RM800mil in new jobs in the medium term,” it said.
Confirm going to hit rock bottom. Mudajaya should not have entered power business as they have no knowledge about power industry. In fact they should start to negotiate to sell of their stocks in India because the longer they wait, the higher the depreciation and the more to lose. It doesn't mean that if they fire all four units, the offer is going to be better as depreciation plays a major part in determining the price of the plant.
The groups outstanding order book and recent huge borrowings cannot make up for the losses incurred or to be incurred in the future as profit margin is presumably thin...and banks loans to this profitable sector are usually "ring fenced" meaning cannot be used for any other project.
Sad another Malaysian company hit by the "Big Project" in India/China syndrome. Not enough thought put to the pitfalls that can happen...of course easy to say on hindsight...I lost a lot and am still very sad....
Actually...strictly speaking...If Mudajaya did indeed guarantee the entire loan for the partnership...they should have reported it in the Contingent liabilities in their audited accounts...so maybe there is still hope that they are only liable for their 26% portion of the partnership liabilities
The only way to salvage the remaining company is to sell the power plant stake in India else sell the assets in Malaysia to recover the lost. Unless the company show any of this action or booking orders in Billions (which seems impossible), the share price will continue to depreciate.
The power plants do have value...but still incomplete and dono if banks can wait...dono if state govt can buy over...or sell to fairfax who have the financial clout.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
charles pang kah keet
1,821 posts
Posted by charles pang kah keet > 2016-11-25 12:13 | Report Abuse
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