Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Malaysian Resources Corp Bhd
(Aug 12, RM2.23)
Maintain buy at RM2.23 with target price of RM3.25: 2Q11 net profit of RM19 million (-12% quarter-on-quarter; and +55% year-on-year) in line with ours and consensus' full- year estimates. 2Q11 construction earnings before interest and tax (Ebit) of RM6.9 million (-60% y-o-y, lower than RM14.5 million in 1Q11) was driven by its RM1.2 billion outstanding order book.
Property Ebit was RM31.2 million (up six-fold y-o-y), driven by ongoing works at Lot G and some contribution from Lot B strata title offices (circa 60% sold @ RM1,200 psf). Property margins were strong at 28% versus 24% in the previous quarter, lifted also by strong average selling price (ASP) for Lot B. The impending launch of Lot D (RM1.4 billion, ASP RM1,100 psf) next month will ensure stronger property earnings going
forward.
Besides solid launches at KL Sentral (Lot D and Lot B), there are other key catalysts for MRCB: (i) the potential award of LRT extensions phase 2, with MRCB likely the front runner for the RM800 million Ampang line; (ii) for the River of Life project, the PDP (Ekovest 60%-MRCB 40%) could secure two out of three scope of works ' RM1 billion beautification works (award 4Q11) and property, but not the RM2 billion river cleaning. And these are only in the first phase; and (iii) MRCB is also gunning for both project manager and developer roles for the RRIM development and has registered its interest. It stands a strong chance of securing them, premised on the following: (i) strong shareholder backing with EPF holding 41.9%, (ii) established track record as master developer for KL Sentral, and (iii) it has committed to raise debt funding by end-2011.
Reiterate 'buy' and sum-of-the-parts-based RM3.25 target price. The recent price weakness is an attractive opportunity to increase exposure in a growing GLC-linked contractor and developer with improving earnings delivery and visible share price catalysts. ' HwangDBS Vickers Research, Aug 12
This article appeared in The Edge Financial Daily, August 15, 2011.
Company Name: MALAYSIAN RESOURCES CORP
| Research House: HWANGDBS | Price Call: BUY | Target Price: 3.25 |
Malaysian Resources Corp Bhd
(Aug 12, RM2.23)
Maintain buy at RM2.23 with target price of RM3.25: 2Q11 net profit of RM19 million (-12% quarter-on-quarter; and +55% year-on-year) in line with ours and consensus' full- year estimates. 2Q11 construction earnings before interest and tax (Ebit) of RM6.9 million (-60% y-o-y, lower than RM14.5 million in 1Q11) was driven by its RM1.2 billion outstanding order book.
Property Ebit was RM31.2 million (up six-fold y-o-y), driven by ongoing works at Lot G and some contribution from Lot B strata title offices (circa 60% sold @ RM1,200 psf). Property margins were strong at 28% versus 24% in the previous quarter, lifted also by strong average selling price (ASP) for Lot B. The impending launch of Lot D (RM1.4 billion, ASP RM1,100 psf) next month will ensure stronger property earnings going
forward.
Besides solid launches at KL Sentral (Lot D and Lot B), there are other key catalysts for MRCB: (i) the potential award of LRT extensions phase 2, with MRCB likely the front runner for the RM800 million Ampang line; (ii) for the River of Life project, the PDP (Ekovest 60%-MRCB 40%) could secure two out of three scope of works ' RM1 billion beautification works (award 4Q11) and property, but not the RM2 billion river cleaning. And these are only in the first phase; and (iii) MRCB is also gunning for both project manager and developer roles for the RRIM development and has registered its interest. It stands a strong chance of securing them, premised on the following: (i) strong shareholder backing with EPF holding 41.9%, (ii) established track record as master developer for KL Sentral, and (iii) it has committed to raise debt funding by end-2011.
Reiterate 'buy' and sum-of-the-parts-based RM3.25 target price. The recent price weakness is an attractive opportunity to increase exposure in a growing GLC-linked contractor and developer with improving earnings delivery and visible share price catalysts. ' HwangDBS Vickers Research, Aug 12
This article appeared in The Edge Financial Daily, August 15, 2011.
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