Mudajaya’s 9MFY12 net profit of RM189.9m was within both our and consensus expectations at 71.2% and 75.4% of the full-year forecasts respectively. That said, we are paring down our FY12 and FY13 core earnings forecasts as management has acknowledged the possibility of more delays at its Chhattisgarh project. While the company’s current FY13 PE of 5.5x and FY14 PE of 4.4x appear cheap at first glance, we continue to caution investors on the murky outlook for India’s coal industry. Maintain NEUTRAL, with our FV slightly lower at RM2.85.
Decent numbers. Mudajaya’s 9MFY12 revenue jumped 47.5% y-o-y to RM1.35bn while core earnings improved by a smaller magnitude of 15.4% y-o-y to RM189.9m (+15.4% y-o-y) as EBIT margin shrank 600bps to 17.0%. We attribute this to lower revenue recognition from its more profitable Chhattisgarh project in India, as evident the in reduced leakages via minority interest amounting to RM5.6m (-55.8% y-o-y, -49.1% q-o-q) recognized it during the quarter. The 3QFY12 numbers are weaker q-o-q and y-o-y, with revenue totaling RM352.7m and net profit at RM55.3m due to what we understand to be an unexpected slowdown in progress at its Chhattisgarh project. On a positive note, the company has declared a second interim DPS of 2.5 sen, bringing its YTD payout to 6.5 sen per share.
Potential delays in India. Our channel checks indicate that the progress of construction at its Chhattisgarh project may have faced more delays due to unfavorable weather as well as labour shortages. It appears that the first unit of its 4x360MW power plant will only be completed by end-1Q13, vs end-FY12 previously, with the remaining three units expected to come on stream on a staggered basis after three months thereafter. Taking that into account, we are trimming our FY12 and FY13 net profit forecasts by 3.4% and 6.3% respectively while our FY14 numbers are left largely unchanged, in which we expect the full year impact with all four units being operational by then.
More local power plant jobs likely. Having secured RM1.91bn worth of new jobs YTD, we believe Mudajaya would likely target more power plant jobs as moving into FY13. Its had earlier submitted a tender for the civil works portion of TNB’s RM3bn Prai power plant, which we understand to worth some RM400m-RM500m. The group is also exploring the possibility of bidding for the civil works portion of the proposed power plant in RAPID Pengerang which we believe to be worth RM600m-RM700m. On top of that, its management hinted that the group is looking at potential infrastructure jobs, which we believe could likely involve the proposed RM1.5bn Damansara-Shah Alam Elevated Expressway and the much-debated RM2bn Kinrara Damansara Expressway. Our FY13 and FY14 orderbook replenishment stands at RM1bn p.a. at this juncture.
Decent numbers. Mudajaya’s 9MFY12 revenue jumped 47.5% y-o-y to RM1.35bn while core earnings improved by a smaller magnitude of 15.4% y-o-y to RM189.9m (+15.4% y-o-y) as EBIT margin shrank 600bps to 17.0%. We attribute this to lower revenue recognition from its more profitable Chhattisgarh project in India, as evident the in reduced leakages via minority interest amounting to RM5.6m (-55.8% y-o-y, -49.1% q-o-q) recognized it during the quarter. The 3QFY12 numbers are weaker q-o-q and y-o-y, with revenue totaling RM352.7m and net profit at RM55.3m due to what we understand to be an unexpected slowdown in progress at its Chhattisgarh project. On a positive note, the company has declared a second interim DPS of 2.5 sen, bringing its YTD payout to 6.5 sen per share.
Potential delays in India. Our channel checks indicate that the progress of construction at its Chhattisgarh project may have faced more delays due to unfavorable weather as well as labour shortages. It appears that the first unit of its 4x360MW power plant will only be completed by end-1Q13, vs end-FY12 previously, with the remaining three units expected to come on stream on a staggered basis after three months thereafter. Taking that into account, we are trimming our FY12 and FY13 net profit forecasts by 3.4% and 6.3% respectively while our FY14 numbers are left largely unchanged, in which we expect the full year impact with all four units being operational by then.
More local power plant jobs likely. Having secured RM1.91bn worth of new jobs YTD, we believe Mudajaya would likely target more power plant jobs as moving into FY13. Its had earlier submitted a tender for the civil works portion of TNB’s RM3bn Prai power plant, which we understand to worth some RM400m-RM500m. The group is also exploring the possibility of bidding for the civil works portion of the proposed power plant in RAPID Pengerang which we believe to be worth RM600m-RM700m. On top of that, its management hinted that the group is looking at potential infrastructure jobs, which we believe could likely involve the proposed RM1.5bn Damansara-Shah Alam Elevated Expressway and the much-debated RM2bn Kinrara Damansara Expressway. Our FY13 and FY14 orderbook replenishment stands at RM1bn p.a. at this juncture.
Coal-nundrum continues. With the end-Nov deadline set by India’s Prime Minister's Office to firm up the fuel supply agreements between Coal India and power producers now looming, we continue to maintain our cautious on Mudajaya. Maintain our NEUTRAL call at marginally revised FV of RM2.85 as we roll forward our valuation to FY13 based on a lower PER of 8x (from 10x previously) pegged to its construction earnings to reflect the likely blip in investors’ sentiment on the delay in completion of its Chhattisgarh power plant as well as pegging a unchanged 50% discount to our SOP valuation to reflect the inherent risks in India’s power industry.
Source: OSK
No comments:
Post a Comment