KUALA LUMPUR: Alliance Research has maintained its Buy call on MMC with a target price of RM4.95 based on 20% discount to sum of parts.
In a note on Wednesday, the research house said MMC is currently trading at 57% discount to our SOP value.
It has adopted the strategy of listing its key businesses, starting with Gas Malaysia in 2012 and Malakoff in 2015, to unlock value. This should provide at least a floor value for MMC.
Based on the market value of both Gas Malaysia and Malakoff, the market is assigning only RM2.3bil to the unlisted businesses such as ports, construction, sole airport in Johor, water concession, and 4,556 acres of land in Johor.
"We understand its port business will be the next to be listed," it said.
MMC booked RM96mil net profit in 1Q15 inclusive of profit from discontinued operations (Malakoff).
The better result was due to continued improvements in Energy & Utilities, where 1Q15 EBIT jumped 38% y-o-y to RM400mil.
This was led by full recovery at Tanjung Bin power plant and contribution from Malakoff Wind Macarthur and Port Dickson Power. The expansion plans for Malakoff should continue to drive the recovery of Energy & Utilities earnings.
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