Friday, September 23, 2011

Mudajaya dips in early trade

KUALA LUMPUR: MUDAJAYA GROUP BHD [] shares declined in early trade on Friday, Sept 23 in line with the overall weaker market sentiment but also on the back of the resignation of its managing director Ng Ying Loong.

At 9.25am, Mudajaya lost nine sen to RM2.01 with 407,500 shares done.

CIMB Research in a note Sept 23 said Ng's resignation caught the research house by surprise, but added that although it may trigger concerns due to its sudden nature, there was no reason to view it negatively.

There research house said that while it was disappointed that there had been no warning, Ng's departure was for personal reasons and there was no hint of conflicts at the management level or issues with the strategic direction of the group.

Management remains optimistic that the changes at the helm do not affect its ability to clinch projects under the 10MP and ETP, it said.

'We make no changes to our forecasts or Buy call but raise our RNAV discount from 20% to 30% in view of the short-term concerns that this change in leadership is likely to stir.

'Our target price goes down from RM5.50 to RM4.81. The main potential re-rating catalyst is contract wins,' it said.

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