Thursday, April 28, 2011

MMC 'undervalued' despite catalysts

Six out of eight research houses have a 'buy' call on the stock, with an average target price of RM3.38.

KUALA LUMPUR: Analysts believe that MMC Corp Bhd's shares are undervalued, but assert that a rally may take some time to come.

"There are catalysts but it won't happen overnight," HwangDBS Vickers Research Sdn Bhd senior analyst Chong Tjen San told Business Times yesterday.

Chong said the listing of Gas Malaysia is expected to happen sometime this year but it is unlikely that MMC will want to pare down its stake too significantly.

"Then there is the 1000MW extension of Tanjung Bin, realisation of land values at Tanjung Bin and Senai, and of course the MRT project.

"Overall, we think the market is perhaps waiting on the sidelines before more clarity on the MRT (tunnelling project) emerges. Still, we expect this to happen by the first quarter of 2012," he said.

Six out of eight research houses surveyed by Bloomberg have a "buy" call on the stock, with an average target price of RM3.38.

MMC rose 1.5 per cent yesterday to close at RM2.66. Year to date, the stock has lost 4.32 per cent.

Chong said a near-term drag for the stock would be Zelan Bhd.

"The company has put a drag on MMC's earnings and there is not much clarity of when it will be able to shed its losses," he added.

HwangDBS Vickers has a target price of RM4.05 for the stock.

Another analyst who declined to be named said a rally would likely only happen once the winner of the MRT tunnelling project is officially announced.

"People were disappointed when MMC was only named delivery project partner for the MRT, because it doesn't really mean much for the company," he said.

In a research report, OSK Research Sdn Bhd research head Chris Eng said he believes there are many potential positive catalysts for MMC that will see the company grabbing the headlines and enjoying a positive rally similar to its other sister companies, DRB-HICOM Bhd and Padiberas Nasional Bhd.

These include Syed Mokhtar buying Penang Port/Northport/ Kuantan Port/Kemaman Port, MMC securing the proposed East-West Railway project and a resurgent of newsflow on Iskandar Malaysia.

MMC is the second largest owner of private landbank in Iskandar.

"With Syed Mokhtar definitely appearing to be in the good books of the government currently, we do expect that it will only be a matter of time before something comes in MMC's way. As such, we maintain our Trading Buy call on the company with our some-of-part fair value unchanged at RM3.62," he said

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TEH : I read this one with great interest!! Haha.

Dedicate this song to her. Hehe


1 comment:

Anonymous said...

hi Teh-O Kosong (aka peanut brain),

you are really stupid, drb offered to buy only khazanah's stake in pos for 3.60 & drb has never offer mgo for other shares thus pos share's are falling, dumb dumb