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Thursday, August 13, 2009

Mudajaya jumps to record on CIMB report

MUDAJAYA Group Bhd, a Malaysian builder, surged to a record after CIMB Investment Bank Bhd said the company is targeting RM600 million (US$171 million) worth of orders by year-end and plans to venture into Vietnam and Saudi Arabia.

The shares leapt 27 per cent to RM3.54 at 11:30 a.m. local time in Kuala Lumpur, set to close at an all-time high. The stock was the best performer on the 319-member FTSE Bursa Malaysia EMAS Index today, which gained 0.6 per cent.

CIMB raised its target price for the stock to RM6.65 from RM3.68 and maintained its “buy” recommendation, it said in a report.

Mudajaya is “gaining appeal as a pump-priming play” and is a “potential winner of mega jobs,” said Sharizan Rosely, an analyst at CIMB.

The “main positive surprise” from a meeting with management is its plan to seek contracts in Vietnam and Saudi Arabia, he said.

Mudajaya is expected to increase its orderbook to RM6 billion from RM5.4 billion by the end of the year as the Malaysian government accelerates a slew of construction contracts to help revive economic growth.

The government has unveiled RM67 billion of stimulus measures to counter an economic slump as plunging exports push the Southeast Asian nation closer to its first recession in a decade.

The government cut its 2009 GDP forecast in May, predicting a contraction of four per cent to five per cent.

Improved Visibility
“Orderbook visibility has improved, thanks to pump-priming,” Sharizan said.

CIMB raised its earnings estimate for the company by 21 per cent for 2010 and by 34 per cent for 2011.

Mudajaya Managing Director Ng Ying Loong was at a meeting and couldn’t be reached for comment, one of his members of staff told Bloomberg.

The builder may bid for the RM2 billion contract to construct a new low-cost airport terminal at Kuala Lumpur’s airport and participate in the RM7 billion upgrade or extension to a railway network in the Klang Valley surrounding the Malaysian capital, CIMB said in the report.

Mudajaya is vying for four contracts valued at as much as $500 million in Vietnam and has submitted US$400 million to US$500 million of bids in Saudi Arabia, the report said.

By Bloomberg

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