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Despite its sister companies DRB-HICOM and Bernas grabbing headlines and generally outperforming the KLCI, MMC, Syed Mokhtar’s crown jewel has been out of investor’s radar screen and underperformed YTD. We believe it will only be a matter of time before this situation changes and we reiterate our Trading Buy call on the stock with an unchanged SOP fair value of RM3.62.
Syed Mokhtar in the news. Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor (Syed Mokhtar) has been in the news lately with his companies grabbing headlines. These include Padini where Syed Mokhtar sold its substantial 28% shareholding, DRB-HICOM where it won the bid to buy 32% of Pos Malaysia and finally Bernas which got its rice management contract extended. Syed Mokhtar’s companies have generally performed well in 2011 outperforming the KLCI. See Figures 1 and 2.
The Jewel in the Crown has underperformed. However, this has not been the case for Syed Mokhtar’s flagship company MMC that has lagged given poor financial results, higher PER and a lack of newsflow in the new year. With MMC having the largest market cap of Syed Mokhtar’s companies, we believe it will only be matter of time before it too announces some good news.
Many potential catalysts. Positive catalysts for MMC include :
(1) Malakoff securing the 1000MW extension to Tanjung Bin
(2) Gas Malaysia’s listing getting more traction
(3) The MMC/Gamuda JV officially securing the tunneling portion of the KL MRT project
(4) Syed Mokhtar buying Penang Port/Northport/Kuantan Port/Kemaman Port
(5) MMC securing the proposed East – West Railway project and
(6) Resurgent newsflow on Iskandar Malaysia where MMC is the second largest owner of private landbank.
Good Trade in volatile times. With Syed Mokhtar in the limelight and so many possible positive catalysts, we believe MMC remains a good Trading Buy call and we maintain our SOP derived fair value at RM3.62.
Limpeh ada some in MMC bought at 2.95