PETALING JAYA: The revival of infrastructure projects such as the mass rapid transit line 3 (MRT3), high-speed rail (HSR) project and the East Coast Rail Link (ECRL) would be a boon for MMC Corp Bhd.
AllianceDBS Research said chances of the said infrastructure projects surfacing in the upcoming Budget 2021 “were high”, as they were “shovel-ready” projects and would be the ideal projects for the government to roll out to spur the economy.
“Besides being a proxy to MRT 3 with its partnership with Gamuda Bhd and the HSR, MMC has emerged as one of the preferred contractors to work with the Terengganu state for the ECRL contract.
“In this regard, it will be working with the state-owned construction companies for ECRL jobs, ” it said in a report yesterday.
Currently, MMC is sitting on a RM4.9bil orderbook.
In its report, AllianceDBS said MMC was one of the stocks with “deep value” on Bursa Malaysia with various businesses encompassing almost the whole Malaysian economy – infrastructure, energy and utilities, airports, industrial land, water concession and ports.
“We see three main themes for the stock – a proxy to the revival in infrastructure flows, an industrial boom beneficiary and the ports turnaround, ” the research house said.
As a case in point, it said that the market value of MMC’s land in Senai was worth more than its current market capitalisation, which stood at RM2.21bil based on yesterday’s closing price of 72 sen.
On the potential plan to revive an initial public offering (IPO) for its port assets, AllianceDBS said the exercise could raise about US$1bil (RM4.3bil).
It was recently reported that MMC may be mulling the revival of an IPO of its port assets by as early as end-2021.
The research firm noted that MMC’s port business did relatively well in the second quarter of 2020 as compared to its competitors. “For transport and logistics, the second-quarter turnover fell by 9% year-on-year (y-o-y) to RM728mil with pre-tax profit also easing by 5% y-o-y to RM208mil.
“Overall, the weaker profit numbers y-o-y were due to lower contributions from Kontena Nasional, Northport and Penang Port, but this was offset by the higher volume handled at the Port of Tanjung Pelepas (PTP) and a gain on disposal of an asset held for sale at Johor Port, ” AllianceDBS said.
A listing of MMC’s port business, if it were to take place, would be one of the biggest in the region since 2012.
However, the plan has been shelved for several years.
MMC owns ports such as Pelabuhan Tanjung Pelepas and Johor Port in the southern state of Johor and Northport in central Selangor as well as Penang Port north of Kuala Lumpur.
AllianceDBS has a “buy” call on MMC with a target price of RM1.35 per share, which is a 40% discount to its sum-of-parts valuation. This is due to its diversified business model.
Sumber: The Star