MMC’s Mideast prospects to ensure growth
04 December 2007 - By EILEEN HEE, The Star Malaysia
PETALING JAYA: MMC Corp Bhd's prospects in the Middle East look bright and it will continue to see strong growth in that region, said a research analyst from OSK Investment Bank in an updated report.
He said businesses in Jazan in the Middle East looked set to start, adding that several agreements had been inked.
The research analyst said one of the projects involved a joint venture with Saudi Binladin and Aluminium Corp of China (CHALCO) to develop, own and operate a US$3bil aluminium smelter with a capacity of one million tonnes a year.
The smelter is due for completion by 2012.
“MMC will have 20% stake. CHALCO will supply the technology and alumina and guarantee the off-take of the aluminium produce,” he said.
The analyst said although MMC does not have experience in the smelting business, given the high internal rate of return of about 20%, the company was willing to take up the stake.
MMC also has 50% stake in a power plant project with the Saudi government.
The analyst said the first phase, when completed, would have a capacity of 1,860MW and cost US$2bil.
“Subsequently, the power plant will be expanded to 4,860MW capacity,” he said.
The analyst said: “We expect good profits from the Saudi projects after 2012 when both projects become operational.”
Moreover, MMC has completed a 20% acquisition of the third container terminal in Jeddah port, which should boost earnings.
The research house expects its local operation to remain stable as well.
“MMC together with Gamuda has finally secured the double-track railway project from Ipoh to Padang Besar worth RM12.5bil to be completed over 60 months,” he said.
The analyst added that the project would provide stable income for MMC.
OSK Research has upgraded the stock to a “buy” call with target price RM11.20.
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