Thursday, 9 June 2011

Mudajaya: Easy to Success?

Mudajaya recently on 2nd June 2011 secured its first contract in 2011: a RM720 million civil works for Manjung power plant extension project. However, its share price are down for the last 3 days from a high of RM4.75 to close at RM4.58 yesterday. Various research houses give a target price of above RM7, but Mudajaya's share still find it hard to breakthrough and remain above RM5... Why?

Mudajaya financial data:

Revenue (mil)4227208691104
Net profit (mil)45117208287
EPS c12315170
DY %111.62.8
ROE %26342737

The 2011 forecast is by CIMB. There is a substantial growth in net profit since 2008 along with its revenue. The ROE is persistently above 25%. However the dividend is low, with only 14.5% payout from its 2010 profit. Perhaps investors don't like this. 

In 2010, Mudajaya made a huge progress overseas by securing the Independent Power Producer project in India worth RM3.4b. Other than India, Mudajaya is also actively exploring business opportunity in Middle East, Laos, Vietnam, Indonesia etc.

Mudajaya's current order book:

Projects Contract value (RM m) Balance of work (RM m)Completed (%)
Chhattisgarh IPP - EP works 3402.32982.912.00%
KL-Kuala Selangor Expressway (KLKSE) - Package 1 & 2 958166.183.00%
Batu Kawah New Township (Kuching, Sarawak) 350141.260.00%
Boulevard Plaza Development, Putrajaya (51% JV) 241.377.568.00%
Crest Jalan Sultan Ismail - building project 219.7102.753.00%
KLIA Spur Line Guideway extension 45.22.894.00%
Vietnam - Internet New City project 188.7188.70
Hospital, Pahang 75.453.130.00%
Mutiara Damansara - Corporate office 41.228.331.00%
10 Damansara - Housing project 2414.739.00%
Pahang Felda - Housing project 9009000
Kuantan Koperasi Tanah - Housing project 1411410
Civil works Janamanjung extension7207200

Currently Mudajaya still has RM5.5b projects on hand and has the potential to bag contracts for power plant and LRT extension work.

Mudajaya will pay out 2x 15% single tier dividend (3 cents) in June. The ex-dates are 21 & 28 June 2011. Though a total of 6 cents dividend are paid in this period, it is not very attractive as the share price is RM4.58 giving a yield of only 1.3% if you buy its shares now. This may not boost the share price up significantly.

    Mudajaya: in consolidating mode

However, Mudajaya proposed 1 bonus share for every 3 existing shares and this is already approved by Bursa on 31 May 2011. It should be approved by shareholders as well during the EGM on 22 June 2011. Will it give the share price a boost? Well, today it looks very likely the price will close down for the fourth consecutive days.

The company announced its Q12011 results 2 weeks ago and its net profit drops 18% QoQ. Has the growth reached its peak? Well, it looks unlikely if the global economy is still recovering. The government has been slow in awarding construction projects and most construction counters also do not perform well in Bursa this year. Can start to accumulate when it shows reversal of current downtrend?

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