MUDAJYA (5085) - Mudajaya Group Berhad - New Nordic fund as shareholders
As an introduction, we are a group of investors from Nordic region that invests in the Malaysia Stocks Exchange.
We have invested in Mudajaya Group Berhad and we are happy with the profit that we have reap so far.
We are happy with the plans that the new management has in place for the company, and we have plans to keep the shares for the long term as we believe in the turnaround plans and future profitability of the company.
We believe that the company is cushioned by the following catalysts:
1. RKM Powergen Power Plant Unit 1 (360MW) powered and generated sales since 3 April 2017. Unit 2 will be commissioned upon receiving approval from relavant authorities. We believe the contribution from one unit of 360MW is RM1billion revenue per annum. Four unit will give a total contribution of RM4billion revenue per annum. Mudajaya's 26% share will bring total revenue to RM1.04billion per annum, and additional RM100million in profits per annum, assuming a conservative margin of 10%. On top of existing contruction orderbook of RM2.5billion until 2019, a conservative calculation of spreading revenue to 36 months, will bring total revenue per annum to RM833million, and earnings of RM50million per annum, assuming conservative construction margin of 6%.
Thus, a conservative estimate of Mudajaya's intrinsive value, with the assumptions above, is:
((Power earnings + Construction earnings) x Group discount for potential future losses from non inclusion of other cash generating segments / Total NOSH)) x conservative PE Ratio of 10 =
((RM100million +RM50milion) x 90%)/555million x 10 = RM2.43 (Conservative price target, with a high discount of 10% applied to earnings).
2. Will the famous investor Mr. Koon Yew Yin purchase back this company shares once all four power plants commence sales? It would be a boost to the company share price if this indeed, happened. (Note: this is just a question for thought, not a definite statement)
3. Orderbook of RM2.5 billion and huge tenderbook will drive non-power segment earnings.
4. New competent management with fresh perspective will boost the company's chances of securing more contracts in the future.
5. A competent management will be able to turnaround a company successfully, in a situation that the company is enduring a hardship, is a management that shareholders can place their trust, believe in and deserving of admiration. CEO James Wong has an excellent track record and we believe he will, like Ng Ying Loong and Anto Joseph has, bring success to the company.
We are glad that Malaysia is a beautiful country and a place for great investment.
Thank you.
MUDAJYA (5085) - Mudajaya Group Berhad - New Nordic fund as shareholders
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