TOD to lead future growth

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.12

MRCB-Monetising Nu Sentral-MIDF-230415

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.24

MRCB-Acquiring German embassy land for RM259.2m-MIDF-080415

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.24

Well positioned to regain its upward earnings trajectory

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.24

MRCB - SPV for Project MX-1

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.16

MRCB - Acquiring remaining stakes

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.16

MRCB -Won Project MX-1

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.16

MRCB - PJ Sentral no longer a dampener, clear road ahead

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.16

MRCB - Poised for forward earnings recovery

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.16

MRCB - Transformation progress

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: HOLD

Target Price: 1.45

MRCB - Minimal impact to earnings

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: HOLD

Target Price: 1.64

Front runner for RM3b freight relief line?

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.07

MIDF maintains 'buy' call on MRCB

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: MIDF

Price Call: BUY

Target Price: 2.43

KUALA LUMPUR: MIDF Equity Research has maintained the "buy" call on Malaysian Resources Corp Bhd (MRCB).

The research house left its forecast unchanged pending an official announcement from MRCB on its acquisition of private developer, Nusa Gapurna Development Sdn Bhd (Nusa Gapurna).

"Our target price is maintained at RM2.43," the research house said in its research note on MRCB today.

As at midday, MRCB rose eight sen to RM1.81.

MIDF Equity Research said it is positive over the news on Nusa Gapurna as the company has a prime landbank profile in the Klang Valley with a gross development value estimated at between RM11-RM13 billion.

It also expressed a liking for MRCB as it expects the company to be the prime developer of the RM10 billion redevelopment of the Rubber Research Institute land set over 1,214 hectares in Sungai Buloh.

"MRCB is also reportedly the frontrunner to develop a prime 8.09-hectare land at Jalan Bangsar in Kuala Lumpur. "Its KL Sentral Development project is also progressing well.

"MRCB has a strong construction orderbook of RM1.4 billion that will last until 2014 and has been prequalified for some MRT1 project packages," it added. -- BERNAMA

RHB raises MRCB to 'trading buy'

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: RHB

Price Call: TRADING BUY

Target Price: 2.02

RHB Research raised its call on builder Malaysian Resources Corporation Bhd (MRCB) to "trading buy" from "market perform" on the back of stronger profits.

"MRCB's near-term earnings visibility is good on the back of strong construction profits underpinned by successful variation order claims," said RHB in a note on Monday.

RHB said risks include contracts coming in below target, rising costs and further delays in developing the country's Rubber Research Institute, where MRCB is eyeing a RM1 billion (US$316.51 million) infrastructure deal.

Ahead of the Malaysia's general elections, RHB expects the share price performance of construction stocks to be capped due to higher risk premiums.

"We are not overly enthusiastic on construction stocks as we believe their share price performance is likely to be capped over the next 6-9 months as the market continues to demand a higher risk premium ahead of the general elections," RHB said.

"Nonetheless, we now see value in MRCB after a steep decline in share price," RHB added.

RHB raised its fair value price to RM2.02 from RM1.83. -- Reuters

Construction (Overweight) - Bridging to Bangladesh

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: HLG

Price Call: BUY

Target Price: 2.50

Stock Name: SENDAI
Company Name: EVERSENDAI CORPORATION BERHAD

Research House: HLG

Price Call: BUY

Target Price: 2.00

Stock Name: IJM
Company Name: IJM CORPORATION BHD

Research House: HLG

Price Call: HOLD

Target Price: 5.77

Construction (Overweight)

Bridging to Bangladesh

• The Government of Malaysia (GoM) has inked a MoU with Bangladesh for the construction of a 6.15kmbridge across the Padma River for US$2.9bn(RM8.7bn). The Padma Multipurpose Bridgewill connect the south-west region of Bangladesh to the rest of thecountry and will be the largest bridge project in the country.
• The project will be undertaken by a consortium of 5 contractors and willnegotiate directly with the Bangladeshi Government after the GoM haveshortlisted the contractors. The contenders are understood to be currentlyundertaking the second Penang Bridge project. Thecompanies slated for selection are United Engineers, MRCB (BUY, TP: RM2.50),PAG Consult (NR) and Eversendai (BUY, TP: RM2.00). Although IJM (HOLD, TP:RM5.77) has not been mentioned in the news, we believe that they could also beone of the contenders.
• With the current pullback in construction stock prices, we believe thatit poses an opportunity to accumulate. Thus, we maintain our OVERWEIGHT stanceon the sector.

Source: HLIB Research - 12 April 2012

EDL compensation for MRCB?

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: AMMB

Price Call: HOLD

Target Price: 2.30

MRCB - OUTPERFORM - 12 March 2012

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: KENANGA

Price Call: BUY

Target Price: 2.71

The Prime Minister, Dato' Seri  Najib has announced that the government willreview the toll collections for Eastern Dispersal Highway (EDL) and it isexpected  to come up with a solution in 2weeks' time. It was also reported that the government is currently looking at technicalissues with regards to the EDL toll collection with the possible abolishment oftoll collection. The toll charge for Class 1 (Cars) had previously been set at RM6.20and tolling to start on 1st July 2012 until 2040 as stipulated in theConcession Agreement (CA). We are not sure on the outcome on the government'sreview decision above at this juncture and a total abolishment or lower tollrates are some of the possible solutions, similar to the decision made for theGrand Saga highway recently. Nonetheless, we note that EDL's CA will somewhatcushion the impact of any toll rate revision via its toll rate mechanism. Themechanism seems to protect both the government and the concessionaire in (1)determining toll rate hikes and (2) toll collection benchmarks via trafficgrowth. We are maintaining our OURPERFORM recommendation on MRCB with a lowerTarget Price of RM2.71 (previously RM3.14) based on its RNAV. We have loweredour FY12 earnings due to the bleak outlook in its property and constructionearnings in FY12 following some delays in its current projects.

Emergence ofpolitical risks.  We see this news asthe emergence of political risk for MRCB and construction sector, which relatesto the highly expected General Election (GE) due in this year. Although thegovernment's decision has yet to come, the market we reckon will perceive thisnews as negative to MRCB. We think that the government is likely to reduce orto abolish the toll collection due possibly to the GE factor. 

Neutral impact?  The toll rate compensation and revision for EDLis calculated differently as compared to other toll concessions via its toll rate mechanism to determine the toll ratehike, i.e. the Agreed Toll Rate (ATR). In short, if the actual toll collectionis higher than the budgeted toll collection, EDL's next toll rate hike would becapped at the actual toll collection rates and vice versa. EDL is entitled toincrease its toll rate at the quantum of 10% for every 3 years. The CA providesa clause for compensation if the government delays or announces lower tollrates as compared to the ATR. We think that the impact will be NEUTRAL for MRCBshould the government abolish or reduce tolling at EDL.  

Lowering downproperty & construction earnings. We have lowered our FY12 earnings by 43% as the management has guidedfor an unexciting reporting period for MRCB in FY12 due to delays in itsproperty and construction projects.

Maintain OUTPERFORMwith a lower Target Price at RM2.71 based on RNAV.  EDL is valued at RM0.14sen in our RNAV basedon DCF valuation with WACC at 8%.

Source: Kenanga

HLIB Research 10 February 2012 (MRCB; Econs; Traders Brief)

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: HLG

Price Call: BUY

Target Price: 2.50

MRCB (BUY)

KL Sentral to support growth

'''' Following yesterday's briefing, we walked away reassured that the company's fundamentals are still strong underpinned by the maturing KL Sentral development.

'''' VOs as much as RM20m should be recognised by FY12, hence an earnings boost for the construction division. However, the division is expected to post EBIT margins of 3-4% going forward as opposed to 7-9% achieved previously. This is due to the intense bidding for the RM1.4bn LRT Ampang Line Package B project. Overall, outstanding order book remains strong at ~RM2.2bn, translating to 3.3x FY11 construction/environmental revenue.

'''' Lot G offices, Aloft Hotel, QSentral (70% take-up) and Sentral Residences (50% take-up/bookings) will continue to drive the property division's earnings. Overall, unbilled property sales stood at ~RM1.68bn, translating to 3.5x FY11 property revenue.

'''' We estimate that FY12 earnings will be impacted by higher financing charges arising from the EDL highway. Hence, we slash our FY12 forecast, while introducing FY14 earnings estimates. That said, it should not impact our valuations as MRCB is valued based on SOP method.

'''' We maintain our BUY call on MRCB for the unique qualities of KL Sentral to support earnings growth, but with a lower TP of RM2.50.

''

''

Performance of IPI (Dec 2011)

'''' IPI growth picked up to 3.0% yoy in Dec (Nov:'' +2.4% yoy), higher than consensus estimate of +1.7%, driven by improvement in electricity and mining segment.

'''' E&E production declined further by 7.4% yoy (Nov: -2.8%) driven by weakness in all product segments, with severe output drop in printed circuit board segment.

'''' Contraction in mining output narrowed to only -0.8% yoy in Dec, reducing its drag on the overall IPI performance.

'''' Maintain our full year 2011 GDP estimate at 5.1%, factoring in 4Q estimate of 5.0%. Also maintain our 2012 GDP growth forecast at 4.5% as we expect resilient domestic demand to cushion the softer industrial sector.

'''' We expect BNM to hold the OPR steady at 3.00% until end-2012 given the resilient economic growth with sticky inflation.

''

Softening in December Export Growth

'''' Export growth moderated further to 6.1% yoy in Dec (Nov: +8.0% yoy), the slowest since June 2011, while import growth bucked the trend, picking up for the second consecutive month to 10.4% yoy (Nov: +8.4% yoy).''

'''' Trade surplus narrowed to RM8.3bn (Nov: RM9.5bn), as import growth significantly outpaced export expansion.

'''' Contribution of palm oil diminished drastically, with export growth slowing sharply to 8.4% yoy in Dec, a sharp slowdown compared to an average growth of 43.2% during Jan-Oct 2011.

'''' Further pick-up in import growth with intermediate imports rising by 7.7% yoy suggests that manufactured exports could remain stable in the coming months.

'''' We expect January's export growth to show temporary contraction due to festivity and seasonality.

'''' MITI announced its official export growth forecast of 5-6% for 2012. Our export growth projection is slightly lower at 4.5%, which is in line our overall GDP outlook.

'''' Maintain our 2012 GDP growth forecast at 4.5% as we expect resilient domestic demand to cushion the softer industrial sector.

''

KLCI: Momentum to remain strong to retest 1570-1580 zones''''''

'''' Despite surging 3.9% from YTD low of 1509 (6 Jan) to 1565 yesterday, technical indicators are bullish and overall market momentum (with the rotational plays on bigcaps, 2^nd & lower liners and penny stocks) remains positive to climb higher towards the resistance targets at 1570-1580 territory.

'''' In our view, any profit taking activities are likely to be well-absorbed near supports at 1551 (upper Bollinger band) and 1531 (10-d SMA).''

''

Dow Jones: Dow ekes out 7 pts gain in a choppy trade''''''

'''' Overall, after surging from Oct 11's low at 10404, investors were cautious after months of continuous gains as the market is approaching an overbought position amid rising RSI.

'''' However, we are encouraged by the continuous improvement in US economic news which show that the country is not as handicapped to what's going on in Europe as in the past.'' In our view, any pullback will attract investors who missed the rally, limiting the decline near supports of 10-d SMA (12695) and 20-d SMA (12582).

MRCB - Highlights from analyst briefing

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: HWANGDBS

Price Call: BUY

Target Price: 3.10

Malaysian Resources Corp; Buy; RM2.19
Price Target: RM3.10; MRC MK

4Q11 included provision for variation orders (VOs) for some construction projects amounting to RM20m. MRCB believe there is strong grounds for claim and a potential write back in 2012 is possible. We understand construction margins for FY11 would be 4% excluding VOs instead of the 1.9% reported.

2012 bottomline growth could be impacted by:- i) higher tax rate as it has utilised most of its tax losses; ii) higher minority interest from Lot D and Lot B; and iii) start up losses and higher interest cost for Eastern Dispersal Link (EDL). However, pretax profit growth should still be decent. We are currently looking at RM107m net profit for FY12F (+38% growth) which is below consensus of RM118m. However, we may look to revise our numbers pending more clarity for EDL and when its KPIs are disclosed in March.

EDL may start tolling in May pending cabinet approval. Based on this, the expected budgeted loss is RM30m to RM40m for FY12F but will be profitable in FY13F assuming traffic volume remains consistent at 70,000 to 80,000 vehicles per day. There will also be higher interest cost as MRCB will unlikely be able to capitalise interest cost going forward (RM7.5m per month) as the project has been completed.

MRCB is still exploring launching a REIT but thinks if it happens in 2012 it will be via injecting its properties into an existing REIT. Lot E has achieved 70% tenancy with average rental rates of RM8.50 psf for office and RM5.50psf for retail. Lot 348 will be delayed up to a maximum of 6 months (realistically one month) but potential LADs may be absorbed by budgeted savings of RM38m from the construction.

With construction flows remaining strong, MRCB has targets to bag at least RM1bn worth of new works in FY12F. It will continue to bid for MRT elevated works, LRT extensions, River of Life projects and environmental projects. On the RM1.3bn LRT contract clinched in 2011, RM450m will be done internally while for the balance MRCB has option to either earn a project fee of 1-2% or participate in the tenders.

Margin guidance for civil works is 3-4%. We maintain our Buy rating and SOP-derived TP of RM3.10. Key catalysts include:- i) potential participation in the RRIM due to its strong parentage; ii) more construction wins; iii) approval for Penang Sentral in 2012 and receiving an official approval for another similar type of project in another state.

Source: HwangDBS Research 10 Feb 2012

MRCB - 4Q anchored by property

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP

Research House: HWANGDBS

Price Call: BUY

Target Price: 3.10

Result Snapshot
Malaysian Resources Corp; Buy; RM2.24
Price target: RM3.10; MRC MK

Making amends in 4Q ' earnings driven by property. Next key catalysts ' RRIM auction and MRT awards. Maintain Buy call and SOP-derived RM3.10 TP.

Source: HwangDBS Equity Research 9 Feb 2012