GEORGE TOWN (Sept 15): Mudajaya Group Bhd rose 5.61% on news of bagging a RM489 million engineering, procurement, construction and commissioning (EPCC) contract for a workers village in the Petroliam Nasional Bhd (Petronasa) RAPID site in Pengerang, Johor.

At 10.49am, the counter increased six sen to RM1.13, with 381,800 shares done, for a market capitalisation of RM576.1 million.

The 15-month long contract, including a temporary construction facilities for the utilities, interconnecting and offsites (UIO) facilities, are said to be an income booster for Mudajaya, which has been in the red for three consecutive quarters.

The construction project which analysts claim comes after a lull this year, has led to mixed calls by analysts who placed a “sell” or “neutral” call on the stock.

Hong Leong Investment Bank maintained a “sell” rating with a higher target price of 99 sen, from 71 sen on Mudajaya, until some `concrete recovery signs come into sight.

It explained while the sizeable job in Rapid was positive, there were pressing problems of cost overruns on existing jobs and delays in its Chhattisgarh independent power producer (IPP) operation in India.

“While this recent job win of RM489.4 million has surpassed our financial year 2015 orderbook replenishment target of RM300 million, we are in no hurry to raise our earnings forecast, as its annual job wins tend to be rather lumpy and inconsistent.

“There is also downside risk to earnings, should the Chhattisgarh IPP fail to commence according to our postulated timeline,” it said.

Public Investment Bank maintained “neutral” with a target price of RM1, despite being positive with the new job, because it expects Mudajaya’s earnings to be weak, as evident from its recent quarterly performance.

Meanwhile, CIMB Investment upgraded Mudajaya to “hold” from “reduce”, following its first notable development as its first contract award in 2015.

(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.)