Strong orderbook, ports will sustain MMC’s financials in 2018

By MARK RAO / Pic By TMR File

MMC Corp Bhd expects its operating companies and sizeable construction orderbook as well as stronger contribution from its ports will support the company’s financials this year, despite a drop in earnings in 2017.

Malaysia’s leading ports, infrastructure and engineering firm reported a net profit of RM85.06 million for the fourth quarter ended Dec 31, 2017, compared to RM267.4 million for the October-December 2016 period.

Revenues for the final quarter of 2017 were RM1.23 billion, compared to RM1.85 billion recorded the year before.

MMC Corp said the drop was largely due to the completion of works on the Klang Valley Mass Rapid Transit (KVMRT) Sungai Buloh-Kajang line in 2016 and the absence of the one-off proceeds from the land sales from the Senai Airport City development.

Its associate company Zelan Bhd’s losses also weighed down on MMC Corp’s earnings.

For the full-year 2017, MMC Corp’s net profit was RM225.41 million, while turnover stood at RM4.16 billion.

In the engineering and construction business, revenue decreased by 16.3% year-onyear to RM1.26 billion due to the completion of the KVMRT Sungai Buloh-Kajang line.

But turnover from the ports and logistics division was higher by 3% at RM2.82 billion.

The ports and logistics business was supported by higher contributions from its Port of Tanjung Pelepas Sdn Bhd operations — Malaysia’s largest container terminal — and the Refinery and Petrochemical Integrated Development Project material offloading facility under its wholly owned unit Johor Port Bhd.

MMC Corp said it remains positive on its prospects due to the improving performance of its operating companies and contribution from ongoing construction projects.

“The ports and logistics division is expected to register higher revenue across all the ports,” it said in a filing yesterday, citing the completed acquisition of a 49% stake in Penang Port Sdn Bhd (PPSB) as a key factor underpinning the growth.

“This and the proposed acquisition of the remaining 51% equity interest are expected to contribute positively to the group’s future earnings as it allows full consolidation of PPSB as a wholly owned subsidiary.”

It said the acquisition will allow the group to establish a strong foothold in the Northern region of Peninsular Malaysia while complementing its presence throughout the Malacca Straits.

The company will also look to undertake operational and cost synergies for the ports and logistics business.

For the engineering and construction division, MMC Corp said its substantial existing orderbook will provide earnings visibility. Its orderbook last reported at RM15 billion as of July last year, and expected to last over the next five years.

The performance of the division will largely be supported by the KVMRT Sungai Buloh- Serdang-Putrajaya line and its role as a project delivery partner (PDP) for the elevated portion of the public transport project.

“Furthermore, the earnings contribution from this division will be sustained by ongoing projects, namely Langat 2 Water Treatment Plant, Langat Centralised Sewerage Treatment Project and our involvement in the PDP role for the Pan Borneo Sabah Highway,” the company said.