Tuesday, 4 October 2011

Mudajaya Year End Sales?

Mudajaya sparks into life again!

After about 2 months of selling pressure, which saw Mudajaya's share price fell almost 50% from RM3.40 to RM1.80, buying interest seems to flock in for the past few days.

Mudajaya has made a big change in its board as the former managing director, Ng stepped down and is replaced by Anto, who is previously a joint MD and has been serving the company for 18 years. Investors may be worry about this changes, as reflected from the sharp drop in its share price.

At the price of about RM2, Mudajaya is deemed to be very cheap at PE of around 5. Its cash is increasing and it has no debt. Not long ago most analyst gave its fair value at RM5-7.

After Janamanjung, there is optimism that Mudajaya will secure more contracts in the subcontract work of power plant extension project, especially Tanjung Bin. The issue of delay in India's project is solved and it is expected to get more projects there.

    Tanjung Bin next?

Recently the company is actively buying back its shares and a few non-executive directors are increasing their stake in the company. There are rumour that Mudajaya may be a target for merger or acquisition due to its attractive price at the moment.

If you look at Mudajaya's share price chart, the volume is significantly higher for the recent 2 months, especially for the past one week. Though it may mean panic selling during this period which has dragged the price down, but it can also be some big players accumulating its shares. When a good stock is more heavily traded compared to before, I think it is usually a good sign.

Mudajaya latest target price:

CIMB 4.81
OSK 2.82

Mudajaya's target price has been cut again and again due to the overall gloomy global economy. However, it is still quite attractive compared to the current share price.

From technical point of view, the MACD is about to crossover, the RSI is below 30% and the volume increases. However, it still hasn't break its downtrend line.

       Mudajaya: still in downtrend

As long as the fear in Euro and US is not settled, any stocks will continue to retreat, including Mudajaya. The best strategy should be buying in stages into a good stock.

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