Mudajaya Group Bhd ('Mudajya') is involved in construction, manufacturing, trading & plant hiring and property development. It was a high flyer which was brought down to earth in 2010 after allegation of improper dealing in its Indian operation. This allegation was not proven after audit investigation but the stock failed to recover its shine. For more on its recent trouble, go here.
Industrial Outlook
Mudajya is primarily involved in the construction of power plants. This company may benefit from the plan to build additional power plants with capacity of 4500MW by 2016. The additional capacity include the 1000MW expansion of the Janamanjung power plant and the 1000MW expansion of the Tanjung Pin power plant. For more, go here & here.
Recent Financial Results
Despite the above-mentioned problem, Mudajya is a profitable concern. For the last 4 quarters, it reported a net profit of RM222 million on a turnover of RM1.146 billion. Its net profit increased by 15% over the preceding 4 quarters while turnover increased by 35%.
Table: Mudajya's last 8 quarterly results
Chart 1: Mudajya's last 12 quarterly results
Financial Position
Based on the financial statement for 30/9/2011, Mudajya is deemed to be in a strong financial position. Its current ratio stood at 2.88 times while it has no bank borrowings. Instead, it has cash & bank balances totaling RM200 million. At the same time, its shareholders' funds amounted to RM956 million. The large shareholders' funds was needed to finance its large debtors, which is equivalent to a collection period of 154 days. Being a contractor for large power plant project, I believe this debtors' collection period is not excessive.
Technical Outlook
Mudajya has declined from its high of about RM4.50 in July 2010 to a recent low of RM1.80 in September 2011. In the process, Kudajya tested its long-term uptrend line. Currently, that support is at RM2.00.
Chart 2: Mudajya's monthly chart as at Jan 3, 2012 (Source: Tradesignum)
Conclusion
Based on strong financial position & good financial performance; attractive valuation; and, positive technical outlook, Mudajya is a good stock for long-term investment. It could benefit from the planned increase in capacity in the power sector.
Hi Alex,
ReplyDeleteI am totally agreed with you that Mudajaya is a fundamental good stock. I am holding this stock since Jun 2010, right after the Indian IPP complaint letter as i believe the market has over-reacted on this negative news.
By the way, do you mind to share the technical outlook of this share? It has traded around RM1.80 to RM2.30 this few months.
What is your opinion as the company's MD, Mr Ng Ying Loong resigned on Sept 2011?
Thanks
Hi chanhoo
ReplyDeleteI don't know enough to comment on the resignation of the company's MD, Mr Ng Ying Loong in Sept 2011.
On the share price hanging around RM1.80-2.00, I believe there are sellers who still want to exit the stock. Their selling keep the share price depressed. It could be a buying opportunity, which the other substantial shareholders aa well as directors are using to accumulate more shares. Go to Bursa's website [under Changes in Shareholdings] and you will see they are increasing their shareholding in the company.
Thanks for your comment
ReplyDeleteHi Alex,
ReplyDeleteWhat's the technical outlook on Mudajaya? Its share price had went up 2 days ago from 2.19 to 2.49. Today, Mudajaya experienced minor correction to end at 2.40.