(Feb 23, RM2.77)
Maintain buy at RM2.81 with target price RM4.05: Headline net profit in 4Q10 of RM105 million (-11% quarter-on-quarter; -3% year-on-year) takes FY10 net profit to RM345 million. Profit was partly lifted by a lower effective tax rate from recognition of deferred tax income largely from Pelabuhan Tanjung Pelepas (PTP), but in line with our RM334 million forecast.
At the pretax line, the numbers were below expectations from largely lower transport and logisitics (T&L)earnings begore interest and tax (Ebit), possibly dragged down by Senai Airport and SMART. For FY10, T&L Ebit grew 12% y-o-y driven by port business — throughput at PTP rose 8.6% to 6.5 million TEU, while Johor Port’s conventional cargo and container volumes rose 9.2% and 3.7% respectively. In energy and utilities, Malakoff’s higher despatch factor (54%) in FY10 (against 50.4% in FY09) and higher volume for Gas Malaysia (+9.6% y-o-y) drove FY10 Ebit up 7% y-o-y.
Meanwhile, associate losses halved to RM52 million in FY10, but Zelan losses continued to drag at MMC’s bottom line.
Trimming FY11/12F earnings by 1% to 5% to reflect continued losses at Zelan after it disclosed there may be liquidated ascertained damages (maximum of RM125 million) and risk of its RM132 million performance bond for its coal-fired power plant project in Indonesia being called upon. However, the impact is offset by a lower effective tax rate.
The immediate catalyst for MMC is the RM36 billion MRT project, which could add RM1.56 per share to its sum-of-parts value (we factored in 50%). Tunnelling for the blue line is expected to be worth RM3 billion to RM4 billion, and some awards should materialize in 2H11.
The other catalysts are: (i) the bid for expansion of its 2,100MW Tanjung Bin coal-fired plant by 1000MW will close in April 2011; (ii) Gas Malaysia listing; (iii) more infrastructure-related projects; and (iv) realisation of higher values for its Tanjung Bin and Senai land, where MMC is supposedly in serious negotiations to bring in oil tank farm operators. — HwangDBS Vickers Research, Feb 23
This article appeared in The Edge Financial Daily, February 24, 2011.
No comments:
Post a Comment