Even if MMC got back their tunnel jobs, it will never be the same again loh...!!
1. There will be substantial discount given to secure jobs, and this will affect its construction margin loh....!! 2. The lost of PDP, means there is a big lost of steady & safe income which affect its bottom line loh....!! 3. The big discount given on elevated MRT for securing the jobs means another big cut in its construction margin mah....!!
The other scenario , If MMC do not get back its tunnel jobs, it will means chaos to its business loh....!!
1. Heavy overheads, subcontractors issue, valuation of half way works etc....!! 2. The use of foreign tunneling contractors will also create competitors to its business loh.....!!
Thus the overall business model of MMC is no longer as lucrative as b4 bcos of govt cost down loh....!!
Overall it is bad news for MMC loh..!!, thats why mkt selldown loh....!!
Following the robust reaction from the joint venture (JV) and those who would be affected by its earlier decision to take away the remaining work on the underground portion of the mass rapid transit Line 2 (MRT2) project, the Cabinet yesterday decided that an attempt be made to bridge the divide.
“They will go back to the negotiation table to resolve this,” a source told The Edge Financial Daily. “The door remains open and hopefully a fresh tender can be avoided”.
It is learnt that four ministers led by Finance Minister Lim Guan Eng will be involved in the renegotiation. They are Economic Affairs Minister Datuk Seri Mohamed Azmin Ali, Transport Minister Anthony Loke and Works Minister Baru Bian.
Remember in stock markets no holds bar with no one can predict how low it can continue to drop yet excluding market crash which is currently still unaccounted despite the drastic dropped across the board . Is just the beginning of iceberg and guess what would happen when the real show begins which I have tasted 90% bit by bit dropped that caught you unaware and unexpected .
Profit to shareholders has continue to fall in FY18 to potentially end at a full year profit of only RM150mil. Profit was affected by the lower contribution of key divisions (port business and construction) as well as the lower performance of key associate company, Malakoff (profit would have been a lot lower if we were to exclude the one-off gains like the RM55mil gain on disposal of Lekir Bulk to TNB). At the current share price this would translate to a valuation of 17.7x PE (again this would be a lot higher if we were to exclude all the one-off gains).
The company’s profit outlook for FY19 would be highly dependent on the port business which itself depends on the outcome of the tariff negotiation between US and China. A failure to reach any meaningful deal would end up with a continuation of trade tariff between the 2 biggest economies which will affect global trade outlook (MMC’s ports included). The Tanjung Bin power plant has consistently faced with unplanned maintenance every year since its first start operation back in early 2016. In FY18, one of its boiler walls had leaked which causes substantial downtime to the plant hence affecting Malakoff financial performance (reparation was only completed at the end of Oct 18). Expect Malakoff low contribution to continue in 4Q18.
If you are looking to diversify your portfolio outside of MMC (due to its earnings uncertainties and the relatively high valuation) I would recommend you to look at MBMR.
MBMR is a direct proxy to Perodua via its 22.6% interest in the company. Valuation is cheap at only 6.9x PE (based on target FY18 profit of RM145mil. 9m profit is already RM106mil). PB is low at only 0.7x BV. 4Q18 results is expected to be higher than 3Q18 and last year's 4Q17.
FY19 growth will be driven by the still high demand of the new Myvi and the newly launched SUV Aruz and also the newly revamp Alza in 2H19. The recent announcement of closure and potential disposal of the loss-making alloy wheel manufacturing business alone is expected to boost the company’s profit by an additional RM10mil to RM20mil. I am projecting a profit to shareholder of RM170 mil for FY19 which at the current price values MBMR at only 5.9x PE.
Please go through the analyst reports (https://klse.i3investor.com/servlets/stk/pt/5983.jsp) and do your own analysis before making any decisions. There are 8 analysts in total covering the stock with most of them having a TP of above RM3 (all have a buy rating). The average TP for the 8 analysts is around RM3.50.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Najib_bodoh
55 posts
Posted by Najib_bodoh > 2018-10-07 19:03 | Report Abuse
https://www.themalaysianinsight.com/s/101646