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Wednesday, August 24, 2011

MUDAJYA - Below expectations; maintain BUY (CIMB)

Mudajaya’s annualised 1H11 core net profit was a letdown, coming in at 71% of our full-year forecast and 77% of consensus. We had underestimated the impact of delays in EP works for the Indian IPP. Although 2Q11’s profits were much improved qoq and 2H will be stronger than 1H, we reduce our FY11-13 EPS forecasts by 2-7% to reflect the hold-ups. This lowers our RNAV by 7.3% from RM7.44 to RM6.88, taking our target price down from
RM5.95 to RM5.50, pegged to 20% RNAV discount. Despite the cut in forecasts, we continue to rate Mudajaya a BUY as the stock could be re-rated by contract awards. CY11-12 P/Es are only 5-6x.

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