Thursday, August 5, 2010

#Update* Mudajaya falls to lowest since November

KUALA LUMPUR: Selling pressure accelerated on MUDAJAYA GROUP BHD [], pushing the share price to the lowest since November last year as worries resurfaced about impact of the Securites Commission's probe into company.

At 3.46pm, it was down 89 sen to RM4.04 with 7.7 million shares. It fell to a low of RM3.75 earlier, lowest since early November.

The FBM KLCI was down 2.56 to 1,360.18.

Market speculation had it that the SC probe followed a complaint about the company's independent power producing project in India, with some analysts noting the company had exceptionally high margins compared with its bigger peers.

However, OSK Research had on Wednesday, maintained a buy on Mudajaya at RM5.08 with a target price of RM7.33.

"Based on our estimates, Phase 1 (RM762 million) hit 41.9% completion as of June versus 23.2% in January. We understand that deliveries for the key plant components are slightly delayed to August from June as scheduled earlier due to minor specification changes," it said.

OSK Research said nonetheless, the management reaffirmed that the entire project is on track for completion by end-2012.

"We expect the bulk of the revenue recognition for Phase 1 to take effect this year. There are also plans to expand capacity by another 2x360MW when the existing four plants near completion.

"This means Mudajaya could land another EP contract estimated to be worth RM1.7 billion," it said.

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