MMC to benefit from Oman water project

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KUCHING: MMC Corporation Bhd (MMC) is expected to benefit from the recent development and construction of an independent water project in Oman, undertaken by its 51 per cent subsidiary, Malakoff, through its 100 per cent subsidiary Malakoff International (MIL).

In a research report by the research arm of Kenanga Investment Bank Bhd (Kenanga Research), “The listing of the independent water project by Malakoff is expected to strengthen MMC’s earnings and secure more recurring income based assets.”

The project, worth RM918 million, was secured by Malakoff through a build-own operate contract from Oman Power and Water Procurement Co.

The research team stated that, “MMC will have an effective interest on the project of up to 22.9 per cent through Malakoff.”

In addition, the project was expected to contribute circa RM14 million to MMC’s pre-tax level, based on the 30 per cent to 35 per cent gross profit assumption on the operation.

The project would be the largest water desalination plant, supplying up to 27 per cent of the total demand for treated water in Oman, the research team noted.

Kenanga Research remained cautiously optimistic about the recent project acquisition by its subdiary and pegged MMC’s target price of RM2.80 per share which was on a sum of parts (SOP) basis.