Friday, 1 March 2013

MMC Corporation Bhd - FY12 results within expectations

Period  4Q12/12M12

Actual vs. Expectations  FY12 results came in within our expectations but short of the consensus estimate. The FY12 core net profit of RM262m came in at 100% and 81% of ours and the consensus estimates, respectively. The main key drivers for the results were: (1) the significant contribution from its associates and JV companies, especially from the Gamuda-MMC JV and (2) a higher tariff for its Johor Port arisng from a tariff revision in August 2011.

Dividends    As expected, no dividend was declared.

Key Result Highlights  The FY12 core net profit of RM262m was down by 18% due to the absence of a c.11% contribution from Gas Malaysia (“GMB”) and a lower margin due to the new tariff hike for the gas intake from Petronas. During the year, MMC also recorded c.RM660m in exceptional items, which mainly came from the gain from disposal of GMB. For the YTD, its Gamuda-MMC JV contributed c.RM51m to its pre-tax level.

 QoQ, the revenue dipped by 10% due to lower contributions from GMB and Malakoff. The energy charges were down during the quarter, in line with the lower average coal price. However, the core net profit was up by 31% as the contribution from its associates and JV companiess increase more than two-fold from RM25m to RM103m.

 YoY, due to GMB’s listing; the group’s revenue and core net profit were down by 30% and 62% respectively. This was due to the lower contribution from GMB and also due to the margin contraction following the upward revision for natural gas tariff.

Outlook  We believe that MMC will be one of the counters to be in focus post-election. MMC could be looking for new asset replacements after the listing of GMB and its upcoming Malakoff listing.

Change to Forecasts  No change to our forecast.

Rating   Maintain MARKET PERFORM

 Maintaining our MARKET PERFORM due to the risk/uncertainty of General Election.

Valuation  We maintain our fair value at RM2.80 based on SOP valuation.

Risks  Delays in the construction of MRT works and the general election risk.

Source: Kenanga

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