MMC remains deeply undervalued, says MIDF

KUALA LUMPUR: MIDF Research is confident over MMC Corp Bhd as a recovery stock play as the group has proven its resilience amid the pandemic.

The research house said this is given the group's diverse revenue streams and deep undervaluation vis-a-vis its asset base with its book value at only RM3.38 per share.

It added the MMC is also deeply undervalued relative to its own historical valuation and peers group average, trading at only BF of 6.5x, which is below one standard deviation of its average five-year BF price-earnings at 10.5x.

MIDF maintained its "buy" call and target price of RM1.30 per share after keeping its earnings estimate for FY21.

The research house said Pelabuhan Tanjung Pelepas's (PTP) role as a transshipment hub will act as a cushion for other MMC Corp's ports, which rely heavily on gateway containers, preventing the overall container throughput from declining more than 10% annually.

"In addition, we expect MMC Corp’s container throughput to recover in FY21, in line with IMF’s Projection of Malaysia’s GDP growth at 7.8% FY21.

"Furthermore, with Maersk, the largest container ship operator in the world, owning a 30% stake in PTP, we believe that the shipping company will ensure that PTP will remain as its regional transshipment hub, ensuring sustainability of TEU’s volume," said MIDF.
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