AmInvestment cuts forecast on MMC, trims FV to RM1.50

KUALA LUMPUR: AmInvestment Bank research has cut its FY20 net profit forecast on MMC Corp Bhd by 6% as result of the weakened outlook for the logistics sector following the Covid-19 outbreak.

Correspondingly, the research house maintained its buy call on the stock but trimmed its fair value by 5% to RM1.50 from RM1.58 previously.

Owing to Covid-19’s disruption of global supply chains and the shipping trade, AmInvestment reduced its FY20 forecast on total container throughput growth assumption to 1%, from 4% previously.

“We continue to like MMC due to its cheap implied valuation for the group’s port business (14x forward PE).

“We also believe that when the Covid-19 outbreak is over, MMC’s ports & logistics segment will continue benefiting from the resilient outlook in the region’s port sector, underpinned by investments in the manufacturing sector that generates tremendous inbound and outbound throughput,” it said

MMC recently announced core net profit of RM248mil, which was 28% higher year-on-year, and came within AmInvestment’s expectations but beat consensus estimates by 7%.

The improved performance was owing to higher volume handled at Port of Tanjung Pelepas and Johor Port and consolidation of Penang port, which was seeing its first full-year earnings.

Contributions from associate Malakoff and Senai Airport also helped to boost earnings.

Source: TheStar