Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.

Monday, December 10, 2012

~ Mudajaya 成榮集團 AnAlysIs ~

Mudajaya is one of the companies I holding currently

Mudajaya main business involves construction, manufacturing, trading & plant hiring and property development. Out of these segments, construction segment alone contributes around 90% of the revenue especially on power plant and highway projects. 

From the latest quarter report, Mudajaya achieves 34.86sen EPS in 9-months period, expect the full year EPS for year 2012 can reach 45sen. With this earning ability, its PE ratio is 2.60/0.45 = 5.78 based on today price of RM2.60 per share. It's still undervalued, perhaps the lowest PE among the construction stocks. 

For the past 5 years, it able to record continuous growth on its revenue, net profit, assets and return on equity holder. Profit margin is >10, ROE too >15 for the past 4 years.

In terms of balance sheet, it's gearing ratio is around 0.5, should not have any difficulty in liquidity. In addition, it has ~RM420m cash in hands which translated into RM0.76 cash per share. Apart from that, Mudajaya has no outstanding borrowings at the latest quarter. Thus, the cash in hands can use to purchase property or equipment or investment without taking up heavy loan for financing. 

As for dividends, Mudajaya is not as generous as it should be. It only pays out less than 20% of its net profit as dividends for the past few years. Up to date for year 2012, it distributed 6.5cents dividends, foresee there will be a final interim dividend at last quarter which total up to around 9cents dividend for year 2012. Thus, the dividend yield is only 3.4% based on today price of RM2.60. 

On the other hand, Mudajaya always practise shares buy back from the open market. Up to  date, Mudajaya holds around 1.04% treasury shares against the total number of outstanding listed shares. It's good as the company feel that his company is undervalued, and purchase back its shares and put as treasury shares. 

On the equity page, the numbers of share permium is almost double of the share capital. There is a good chance the company will perform a bonus share option to improve the share liquidity in the market as its NTA per share is well above its share par value too. 

Of course, there is bad side of this company. The on-going saga in India about the coal supply which deters the investors from paying more attention on him and of course the high price that Mudajaya paid to acquire around 26% stake in RKM Powergen in India still left some unwanted memory in the investors' mind. But it does provide a recurring income to Mudajaya if the plan goes through. 

Anyway, Mudajaya is still consider fundamentally good at least to me. If the price goes up to let's say a PE of 8 to 10, it provides at least 40% upside of current price albeit a little bit low dividend yield and uncertainty in India. 

Just keep monitoring and happy investing


  1. haha...this was 1 of my best performing stock 5 years back when no people bothering about this stock. I collected at around RM1.80 and sold all at around RM3.00, made a good profit to pay for your MYVI now...haha...you can ask your mum..kaka

    Your brother..haha

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