MMC Corp rises after note says Malakoff listing to provide benchmark valuation for MMC

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KUALA LUMPUR (May 7): Shares of MMC Corporation Bhd rose in the morning session today after AllianceDBS Research had rated the stock a “Buy” at RM2.60 with a target price of RM4.95 and said the listing of Malakoff Corporation Bhd would be earnings accretive to MMC Corp, raising FY15F–FY16F EPS by 5%–11% after interest cost-savings.

At 12.30pm, MMC Corp (fundamental: 1.00; valuation: 1.40) rose 2.69% or seven sen to RM2.67 with 788,800 shares done.

In a note today, the research house said this was based on MMC Corp’s 51% stake being reduced to 38%, which would remove RM18.2 billion of debt from its balance sheet.

“As such, we also expect gross gearing to fall to just 0.65x from 2.3x currently. ROEs should also improve to 6.1%–7.5% from 5.8%–6.8%.

“Positive impact on balance sheet and earnings,” it said.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)