AmInvestment Bank Bhd maintained its 'buy' recommendation on MMC Corporation after implementing a move to reduce its shareholding in Red Sea Gateway Terminal Co Ltd (RSGT) from 20% to 12% of the company's shares and slightly lower the company's equivalent value (FV).
In a note today, the bank said the proceeds from the sale of 211.1 million riyals (RM227.6 million) would reduce MMC's net debt to RM8.57 billion from RM8.79 billion as at 30 September 2020.
"We know that the disposal will result in a profit but the amount has not been announced," AmInvestment Bank said as reported by Bernama.
Last Friday, MMC announced it would abolish part of its stake in RSGT, an independent container terminal operator at Jeddah Islamic port in Saudi Arabia.
The bank described the impact of the disposal of shares on MMC operating profit as ‘immaterial’.
"For the first nine months of the financial year ended 31 December 2020, RSGT contributed less than 5% of the group's core net profit," he said.
AmInvestment Bank lowered the FV for MMC to RM1.50 from RM1.56 previously based on the valuation of total shares to reflect the bank's latest decline in FV for Malakoff to RM1.00 from RM1.10 previously.
Meanwhile, according to the bank, the outlook for the port sector in the region, including Malaysia, will continue to be resilient in the long run, supported by global trade and investment in the manufacturing sector.
