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Stocks In Focus MY (Mudajaya, Pesona Metro, Plenitude) – 03/03/15

Shares Investment

Mudajaya Hurt By Additional Costs

  • Sentiment on construction company Mudajaya Group was dampened following its dismal FY14 performance. For FY14, the company posted a net loss of RM70.2 million, compared with a net profit of RM151.2 million previously while revenue slipped 32.1 percent to RM1.0 billion.

  • The group’s overall performance had been affected by the extra expenses incurred due to the acceleration of works and the all-round rise in construction-related expenses for the local projects. Additionally, costs on variation orders (VO) incurred on the local projects had been fully recognized in the accounts unlike the revenue relating to the VO claims which was only partially accounted for, pending the finalisation of the overall claims with the clients.

  • PublicInvest Research reported that the firm’s FY14 cost pressures were mainly because of cost overruns from ongoing works at the Janamanjung power plant in Perak. On the other hand, CIMB Research noted that it was consoled by the group’s continued bullish stance on expanding its regional independent power producer ventures for recurring income, though it seems that the size and scale of new prospects appeared insufficient to offset its falling construction profit.

Signifiance: CIMB Research reported it was maintaining a cautious outlook for the company because of its dimming earnings prospects as a result of the persistent delays in tenders for its highway and power plant construction segments, shrinking tender book, declining construction margins and delayed Indian Power Plant cash flows. As such, it has issued a ‘Reduce’ rating on the stock with a lowered target price of RM1.26.

Pesona Metro JV Clinches RM172m Road Project

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  • Pesona Metro Holdings and its joint-venture partners have been awarded a RM172.7 million roadworks project, Section 3E2 of the Central Spine Road highway, which stretches from Merapoh to Kampung Kubang Rusa. The company said its unit, Pesona Metro, and the partners, Pembinaan Kaleigh and Hanawin, would undertake the project, which is expected to take 36 months to complete with effect from 17 March.

  • The new highway project is part of the East Coast Economic Region plan. The firm had previously been awarded and has finished roadworks for Section 3F of the Central Spine Road highway from 2010 to 2013 and was also chosen as the main contractor of the rehabilitation and beautification project of Sungai Melaka and its riverine embankment which has been assessed to be worth more than RM234 million.

  • The group is optimistic about its performance, noting that it is on a positive growth this year, citing its recent 4Q14 earnings of more than RM61.6 million. The firm added that its present unbilled order-book was at almost RM600 million while it has submitted tenders and bids for works which have an aggregate value of approximately RM1 billion.

Significance: On 2015, the group feels that it will be a promising year despite the general outlook since it has been able to win the Merapoh to Kg Kubang Rusa’s roadworks project and is in the process of completing some other deals.

Plenitude Proposes Take Over Of Nomad For RM279m

  • Property developer Plenitude has offered to take over The Nomad Group, which owns a string of properties in Kuala Lumpur and Penang, for RM278.8 million via the issuance of 111.6 million new Plenitude shares of RM2.50 each. Nomad shareholders would be offered one Plenitude share for every two Nomad shares in the deal.

  • Nomad said its board would consider the offer and decide whether to seek an alternate person to make a takeover offer. Its rationale for the transaction included effective premiums with respect to implied offer prices, historical market prices of Nomad shares and accepting holders’ receipt of more Plenitude shares under the offer as compared with swapping their investment to Plenitude’s shares in the open market based on market prices.

  • For 4Q14, Nomad returned to the black with net profits of RM10.5 million, recovering from a net loss of RM0.9 million in 4Q13. Nevertheless, its revenue decreased by 6.8 percent to RM17.9 million.

Significance:Plenitude said the acquisition will enable it to venture into the Kuala Lumpur hotel sector through Nomad’s presence in the city. Nomad owns the Novotel Kuala Lumpur City Centre, The Nomad SuCasa, GLOW Penang and The Nomad Services Residences Bangsar while Plenitude’s hotels are currently situated in Penang.



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