Recently the company has been actively buying back its shares. The most recent buyback was on Dec 15, 2010 when it acquired 20000 shares at RM3.09 for a total purchase consideration of RM78569. To date, cumulative outstanding treasury shares number just over three million.
Mudajaya has been buying back its shares since May 2010. The usual rationale when it comes to share buybacks – which can be seen as a show of confidence – is that companies do it to stabilise their share price, or because they feel their shares are undervalued.
It has cash and bank balances of RM186 million and no debt.
However its third quarterly earnings show a slowdown in growth, with net profit declining q-to-q to RM46.5 million form RM54.2 million. Top line numbers also fell q-to-.
Despite concerns in India, Mudajaya appers to be ploughing ahead with its plans to expand regionally.
So ultimately, while there is still growth on the horizon for Mudajaya, buying into the company at this point of time (Dec 2010) would mean belief in its long term prospects. Although a stronger 4Q2010 would definitely add some support for Mudajaya;s counter, it is unlikely to mimic the performance seen in the first half of 2010.
Certainly its progress in India will be closely watched. To recap, RK Powergen Pvt Ltd – in which Mudajaya holds 26% stake – signed an agreement with the government of Chhattisgarch for 1 1440 MV coal fired power plant.
Mudajaya was subsequently awarded the EP contract for Phase 1 and of the power plant, which is due to be completed in 2012. The company had intended to use its experience in Chhattisgarch as a springboard to bid for the various ultra mega power plants planned by the Indian government.
However, the ultra mega power plants have since bee delayed, which puts a question mark over Mudajaya’s near term outlook in India.
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