Mudajaya buy by OSK


It was announced that Mudajaya has been awarded the job to construct a Tune
Hotel in Danga Bay worth RM19.9m. This is the 2nd Tune Hotel contract the
company has secured. Other outlets could be opened in Malacca and Kuantan.
Mudajaya’s domestic jobs flow should remain positive with another RM500m in the
pipeline for 2009. Our earnings forecasts are raised marginally as we account for
this new job. Maintain BUY, with a target price of RM2.13.

Maintain BUY. This new contract has minimal impact on our earnings forecast given its
relatively small size (+1% for FY09–10 earnings). We maintain our BUY rating on
Mudajaya given its strong earnings prospects (3-year CAGRf=40.3%), primarily driven by
the EP contract for India’s Chhattisgarh IPP. We raise our mid-CY10 earnings multiplier
from 9x to 10x and increase our TP to RM2.13 (from RM1.90). Not imputed in our
valuation are (i) new jobs flow, and (ii) the NPV of its Chhattisgarh IPP venture.