PETALING JAYA: MMC Corp Bhd will likely be able to sustain its growth momentum through 2021 after seeing a strong first-quarter performance, thanks to its robust ports and logistics division.
The conglomerate, which is actively bidding for new projects, will also likely see its order book expand, thus improving medium to long-term earnings visibility.
MMC’s construction order book is currently estimated at RM4.9bil, of which 90% comprise work for the Mass Rapid Transit (MRT) Line 2, which is expected to be completed by 2022.
Citing the factors working in MMC’s favour, several brokerages have voiced their optimistism about MMC’s prospects.
MIDF Research, for instance, said it remained sanguine that 2021 would bode well for ports players such as MMC, as it would ride the tailwind of economic recovery without the disruptions caused by any unplanned lockdown that could hinder movement of trades.
“We believe avoidance of total lockdown by the government is a positive for MMC as the economic sector will remain open, ” the brokerage said in its report.
In addition, MMC’s engineering and construction segment would be a potential beneficiary of the anticipated economic recovery and expansionary Budget 2021, it said.
MIDF maintained “buy” on MMC, with an unchanged target price of RM1.30.
Kenanga Research, on the other hand, rated MMC a “market perform”, with an unchanged target price of RM1.05.
“The port and logistics division has been showing improvement in performance, underpinned by the economic recovery momentum since the resumption of global and domestic trade activities.
“We do not discount the management continuing its pursuit to acquire additional ports to boost its profile as the largest port operator in the country, ” Kenanga Research pointed out.
At present, MMC’s ports portfolio consists of Pelabuhan Tanjung Pelepas (PTP) (pic) and Johor Port in Johor; Northport in Klang, Selangor; Penang Port in Penang; and Tanjung Bruas Port in Melaka.
“We gathered that while its construction order book is currently at RM4.9bil, management is actively bidding for new projects in order to meet its targeted order book replenishment of around RM500mil per annum, ” Kenanga Research said.
During the first quarter ended March 31,2021, MMC saw its net profit more than double to RM124.7mil from RM57.9mil in the corresponding period a year ago, while revenue rose 5.2% RM1.14bil from RM1.08bil previously.
The group said its strong results in the first quarter were driven by higher volume handled at PTP and Northport.
“These were offset by lower work progress from MRT Line 2, lower passenger and cargo volumes at Senai Airport, and lower volume handled at Penang Port, ” it said.
MMC’s shares were last traded at RM1.16, up four sen.