Weak orderbook visibility deeply undervalues MMC’s stock, says MIDF


MMC Corp Bhd shares hit a limit-up or 39 sen higher at RM1.69 following a proposal by Seaport Terminal (Johore) Sdn Bhd (STJ) to privatize MMC via a selective capital reduction and repayment exercise at RM2 a share.

Tan Sri Syed Mokhtar indirectly holds the entire equity interest in STJ, which holds a 51.76% in MMC.

The proposed exercise will be funded by way of an advance from the STJ to MMC.Seaport Terminal cited poor valuation as the reason to undertake the proposed exercise.

Limited visibility of MMC’s orderbook is one of the factors the stock remains undervaluation, MIDF Research stated in a note today.

Its orderbook visibility is only until 1QFY23, upon the expiry of Langat Sewerage Project.

“We believe the much anticipated MRT 3, which MMC-Gamuda remains a favorite for the tender award wins, will be the catalyst for upward re-rating for the group.

“Notwithstanding this, we are pleasantly surprised that value revision comes faster than expected, albeit from a different kind of catalyst,” said MIDF.

It added MMC is a “no-brainer” pick for the economic recovery play.

“We postulate that MMC is ripe for value revision as the group has proven to be resilient amid the pandemic. Even relative to its historical valuation,” it added.