Mudajaya announced its first contract for the year, after snagging a Pan Borneo job worth RM1.33bn. The job is awarded to a JV company i.e. Musyati Sdn Bhd - Mudajaya Corporation Berhad Joint Venture” on the basis of 70%:30%, or effectively giving Mudajaya c.RM400m worth of job value. Earnings estimates are kept unchanged as this is within our replenishment estimates of RM1bn p.a. Maintain Neutral but raise our TP to RM1.20 (from RM1.00 previously) after reducing discount to NTA to 40%, given potential earnings recovery from more jobs and commissioning of its Indian power plants.

The job. The Pan Borneo came in as a positive surprise, given the dearth of contracts so far by the Group. The job entails the development and upgrading of the proposed Pan Borneo Highway in Sarawak for Phase 1 from Sg. Kua Bridge to Sg. Arip Bridge. The Contract is targeted to be fully completed by October 2020 with a construction period of 48 months from the date of the site possession.

Outstanding orderbook. We estimate the Group’s orderbook to increase to RM1.4bn from the new job win. Going forward, tender book is believed to be around c.RM8bn, primarily from the power industry (e.g. Tracks 3B & 4A, Pengerang, etc) worth c.RM1.5bn. Other jobs eyed include highways such as DASH and SUKE, MRT2 and LRT3.

Source: PublicInvest Research - 29 Jul 2016