Is There Leg To The Recent Rally?
Over the course of the year, its share has been beaten down heavily, tumbled from a 1-year high of RM1.470 per share in Jan-16 2016 to 1-year low of RM0.725 per share in end-Nov 16 2016.
As a construction company, this looks contradictory given most construction stocks have had a good run till end Nov 2016. However, the share price has rebounded sharply from the low and ended at a price of RM0.94 per share till 23 Dec 2016.
So What’s Going On?
Before digging deeper into reason behind the rally, let’s take a look at what has caused the share fallen so much on 16 Jan 2016. Observers reckon the huge losses incurred over the past 2 quarters (ended Sept 2016) and jittery on its upcoming (4QFY2016 ended Dec 2016) due of the current liabilities played a big part of it.
Taking a closer look at the quarterly result ended 30 Sep 2016, the management team has highlighted 2 major reasons: 1) Poor cost management on its construction projects has resulted in operating losses for the segment despite a huge jump in revenue and 2) Equity accounting of losses from associates in India (company which operates the power plant) as well as impairment of the Philippines wind farm related investment.
For the former, not much details have been provided (eg. high foreign labor cost, penalty because of delay etc), hence it is hard to know whether it is going to be a one-off event or otherwise.
As for the latter, the impairment of the Philippines wind farm related investment means that this investment has most likely failed and will not be able to generate earnings in the future (it has never generated any earnings yet as it is still in its construction stage), but one thing to note is that this is a mark to market losses with no impact on actual cash flow hence funding.
Similarly, equity accounting of losses from associates in India is also a form of non-cash expense, reflecting the estimated depreciation of unit 1 & 2 and interest expense that could not be capitalized after commercial operation date (COD) set by the government. The COD is defined as the date after which all testing and commissioning has been completed and is the initiation date to which the seller can start producing electricity for sale (i.e. when the project has been substantially completed).
Furthermore, there are also lingering uncertainties on the repayment of RM240 million of MTNs due on 23 January 2017 and the group’s weak YTD Sep 2016 performance as highlighted by the RAM Ratings. This is reflected via its staggering high level of current liabilities.
Is It All Doom and Gloom For Mudajaya Then?
If all of these looks so gloomy for Mudajaya, investors might be scratching their head why is there a rally in the share price lately? Here’s are something that the existing shareholders should be cheerful about:
1) Indian associates: While we are not too sure whether these expenses (depreciation and interest) will persist moving forward, the good news is that the long waited power plant can start to contribute positively to the revenue of the company as a 25-year power purchase agreement for its Unit 1 has been signed in March 16 2016. The negotiation for the PPA for Unit 2 was in progress and was expected to be concluded soon.
There is also rumour on the sales of the 26% stake in this Indian associates once the construction for power plant completed, which could be a boon to share price as the market has been quite pessimistic on this venture.
2) Concern on debt repayment: Mudajaya had entered into a subscription agreement with Sun Hung Kai Investment Services Limited (SHK) to underwrite the proposed issuance of US$60 million of MTNs (Series 1) under the Group’s US$200 million Euro MTN programme (EMTN). Series 1 is expected to be issued by end-December 2016, and a part of the proceeds will be used to facilitate the redemption of the RM240 million of MTNs due in January 2017.
Besides that, Mudajaya Corporation Berhad, a wholly-owned subsidiary of Mudajaya Group Berhad has also secured a term loan facility of USD50 million (equivalent to approximately RM223.8 million) from United Overseas Bank (Malaysia) Bhd for general corporate purposes including the redemption of Sukuk Programme. These new fundings should be sufficient to cover most of the debt repayment in the near term.
3) New contracts bagged: Mudajaya Corporation Berhad has won 3 large scale contracts in just 1 month time- (1) the development of a Large Scale Solar PV Plant (LSSPV) of 49.00 MWa.c. on Build-Own-Operate basis at Sungai Siput, Kuala Kangsar, Perak with a contract value of RM270 million over the span of 18 months, (2) construction and completion of viaduct guideway and other associated works from Universiti Putra Malaysia to Taman Pinggiran Putra in Putrajaya (KVMRT Package V207)with a contract value of RM560 million over the span of 56 months and (3)the construction and completion of Package 2 (Ayer Itam to Lebuhraya Tun Dr. Lim Chong Eu By-Pass) of Penang Major Roads and Third Link Project in the State of Penang with a contract value of RM810 million over the span of 36 months. These contracts in total sum up to RM1.6 bil, which is a huge amount for a company with a market capitalization of RM507 million.
注意， 有关光伏发电厂（LSSPV)，是要自己拿钱来建， 不明白写成好像是拿到工程，非常误导， 非常误导性。MUDAJAYA 要拿出几亿令吉来建。。。。满是债务的成荣还贪心。。。印度发电厂已经不是一波三折， 是三波九折。。。搞到满身债务。。。。还乱七八糟。。。证券委员会应该设立研究组研究这个印度投资， 搞到什么样了。。。。。。。。
我就提过， 之前一位朋友和中国公司， 就有一项类似的计划， 要4亿令吉。是给你这个计划， 是要拿钱来建， 要至少四亿令吉。。。。。
看华文报章的新闻， 以为是拿到发电厂PROJECT， 那是不对，不实的。
现在你看是BUILD, OWN, OPERATE ..就是兴建， 拥有及操作（运作）。。。。当然是自己出钱， 是自己的工程。。。。。。2亿7千万令吉。。。。。自己去找钱。。。。看上面的大量贷款。。。。。一单到期， 又再借钱。。。没完没了。。。。实在可怕。
新闻解读：
政府积极推动再生能源电力业发展，能源委员会今日一口气释出4项太阳能发电厂合约，总发电量达159兆瓦。
（吉隆坡21日讯）政府积极推动再生能源电力业发展，能源委员会今日一口气释出4项太阳能发电厂合约，总发电量达159兆瓦。
总发电量159兆瓦
根据文告，得标公司分别是国家能源（TENAGA，5347，主板贸服组）、马拉科夫（MALAKOF，5264，主板贸服组）财团、成荣集团（MUDAJYA，5085，主板建筑组）和综合通运（ILB，5614，主板贸服组）。
国能表示，已接获能源委员会发出的中标通知，将在雪兰莪瓜拉冷岳建造产能50兆瓦的发电厂，正式意向书将在双方完成洽商后发出。
马拉科夫指出，将联手多元资源工业环境服务公司（DHES），以51%和49%持股比例，在霹雳丹绒马林的200英亩土地建造产能50兆瓦的发电厂，预期2018年7月1日投运，电供期限为21年。DHES为多元资源工业（DRBHCOM，1619，主板工业产品组）独资子公司。
成荣集团公布，已获得2亿7000万令吉的霹雳瓜拉江沙发电厂合约，预期将在明年2月签约，并在18个月内完成产能49兆瓦的发电厂。
此外，综合通运（ILB，5614，主板贸服组）宣布，属下IL太阳能公司已经标得发电厂计划，将在吉打黑木山建造产能10兆瓦的发电厂。
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