November 2, 2011

HLIB Research 2 November 2011 (MRCB; Traders Brief)

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Research House: HLGPrice Call: BUYTarget Price: 2.19




MRCB (BUY)

KL Sentral development to remain resilient

'''' We had a discussion with MRCB's management and walked away feeling reassured that the development within KL Sentral will remain robust.

'''' Q Sentral Office has achieved an 80% take up rate from 70% last month, while Tower A of Sentral Residences has achieved 70% sales. ASP/sq ft for these two developments ranges ~RM1,100-1,200 sq/ft and we believe this premium will stay given the uniqueness of KL Sentral.

'''' Overall, MRCB has a huge unbilled sales of ~RM1.2bn, translating to ~6.3x FY10's property revenue and outstanding order book to ~RM1.84bn, translating to ~2.2x FY10's construction and environmental revenue.

'''' On a separate note, 3Q results will be announced either on the 15th or 25th Nov. We are expecting a seasonally weak quarter.

'''' We maintain BUY call on MRCB with an increased TP of RM2.19 after fine-tuning our SOP valuation to reflect Brickfields development and higher rental income.

''

Downbeat tone amid external woes

'''' The downbeat external woes will accelerate an overdue correction on KLCI towards the immediate near term supports at 10-d SMA (now at 1459) and 50-d SMA (1435) pts. Further supports are 61.8% FR at 1421 and 30-d SMA (at 1417) levels. Immediate resistance zones are 38.2% FR (at 1488), 1493 and 1500 psychological barrier.

Hang Seng Index: Heading towards 18k on weakening technicals''

'''' Technically, near term HSI outlook has turned negative following the failure to reclaim the 100-d SMA (now at 20337) and the downtrend slope (near 21660) coupled with deteriorating technical readings. Immediate resistance levels are 20337-22016 while supports are situated at 18000-19000.

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