AMRESEARCH has remained cautious on MMC Corporation Bhd even though its 50%-owned Jazan Economic City (JEC) project in Saudi Arabia had attracted investments worth US$30 billion (RM105.6 billion) over two years, well ahead of the 25-year time frame set during its launch in 2006.

MMC and its joint venture (JV) partner Saudi Binladin Group (SBG) and Chalco Hong Kong Ltd also signed a letter of intent with CPI Power Engineering Co Ltd on Wednesday to design, supply, install, construct and commission a 2,400MW captive power plant, at a cost of RM2.5 billion, for an aluminium smelter in JEC.

It had also signed a memorandum of understanding with SBG to develop an industrial port at JEC, expected to cost US$1.4 billion.

“The combined power plant requirement for JEC may reach 4,860MW, which could cost US$5 billion. Other major projects include a US$3.5 billion aluminium smelter with an annual capacity of one million tones, a US$2 billion steel cluster and US$12 billion oil refinery.

“Secondary industries will include steel with investments worth US$500 million, automotive (US$200 million) and shipbuilding (US$900 million),” it said.

It added that DRB-Hicom, together with SBG and JEC Ltd, had plans to set up Saudi Arabia’s very first automotive assembly and manufacturing plant for light and heavy vehicles, while JEC Ltd also planned to establish a US$900 million shipbuilding and repair centre in JEC, which was in close proximity to the heavy shipping traffic plying the busy Red Sea and Suez Canal route.

Meanwhile, the research house said the proposed listing of JEC on the Saudi Stock Exchange, earlier targeted in 1H09 to raise capital for the, was somewhat uncertain given the recent turmoil in the financial markets, “Earnings form JEC’s projects will likely commence after 2013 when the first power plant commences operation. Given the protracted gestation period, we have not imputed any contributions from JEC to our sum-of-parts valuation of RM4.44 per share,” it said.

AmResearch has maintained its hold stance on MMC, with an unchanged target price of RM2.22, based on a discount of 50% to its SOP valuation of RM4.44 per share.

“We remain cautious given the potential 23% expansion in MMC’s share base from the proposed aoqulsition of Senai Airport terminal and its surrounding 2,718-acere piece of land,” it said. MMC shed three sen to RM1.94 yesterday.