MRCB (1651) : Malaysian Resources Corp - Brighter job prospects
Target RM2.08 (Stock Rating: ADD)
MRCB's annualised 9M14 core net profit made up 92% of our full-year forecast and 89% of consensus. The results were broadly in line as we expect 4Q to show strong property numbers. Management sounded more optimistic on order flows, while confirming the RM800m incinerator project tender as a new prospect. EPS forecasts are maintained. Our target price is intact (still pegged to a 20% RNAV discount), as the effect of rolling over to end-2015 is offset by the update of balance sheet items. Yesterday's RM141m domestic contract win adds on to the increasing visibility of new jobs. The group's longer-term prospects in the property segment are backed by over RM30bn in outstanding GDV. Maintain Add. Jobs wins are medium-term catalysts.
Strong numbers from property
Annualised 9M14 core net profit made up 92% of our full-year forecast and 89% of consensus. The performance was broadly in line, with the company expected to report strong property earnings in 4Q as PJ Sentral’s contribution picks up. Core construction EBIT margin of 4-5% is intact as 9M14 construction EBIT margin of 14% is not sustainable and was boosted by substantial gains from DUKE disposal and write back of LAD provisions. The absence of dividends was expected.
Ramping up construction tenders
MRCB announced that it secured a building contract worth RM141m from Desaru Peace Holdings. This supports its earlier guidance of being increasingly active in tenders over the past few months. From the briefing, there is now greater clarity on the outlook of job flows, with management confirming that it is tendering for a construction/concession-type incinerator project reportedly to be worth RM800m – a potential maiden renewable energy (RE) venture. We maintain our RM500m p.a. new jobs assumption for now.
Share price throwing up value
The stock is down 18% from its 52-week high of RM1.79, largely due to the overhang from the property cooling measures and lack of job flows. However, MRCB's appeal over the next few months is likely to gravitate to construction, while its longer-term property development prospects are anchored by PJ Sentral and Kwasa Damansara's MX-1 worth RM31.4bn in total incoming GDV.
Source: CIMB Daybreak - 19 November 2014, Full PDF Report
Target RM2.08 (Stock Rating: ADD)
MRCB's annualised 9M14 core net profit made up 92% of our full-year forecast and 89% of consensus. The results were broadly in line as we expect 4Q to show strong property numbers. Management sounded more optimistic on order flows, while confirming the RM800m incinerator project tender as a new prospect. EPS forecasts are maintained. Our target price is intact (still pegged to a 20% RNAV discount), as the effect of rolling over to end-2015 is offset by the update of balance sheet items. Yesterday's RM141m domestic contract win adds on to the increasing visibility of new jobs. The group's longer-term prospects in the property segment are backed by over RM30bn in outstanding GDV. Maintain Add. Jobs wins are medium-term catalysts.
Strong numbers from property
Annualised 9M14 core net profit made up 92% of our full-year forecast and 89% of consensus. The performance was broadly in line, with the company expected to report strong property earnings in 4Q as PJ Sentral’s contribution picks up. Core construction EBIT margin of 4-5% is intact as 9M14 construction EBIT margin of 14% is not sustainable and was boosted by substantial gains from DUKE disposal and write back of LAD provisions. The absence of dividends was expected.
Ramping up construction tenders
MRCB announced that it secured a building contract worth RM141m from Desaru Peace Holdings. This supports its earlier guidance of being increasingly active in tenders over the past few months. From the briefing, there is now greater clarity on the outlook of job flows, with management confirming that it is tendering for a construction/concession-type incinerator project reportedly to be worth RM800m – a potential maiden renewable energy (RE) venture. We maintain our RM500m p.a. new jobs assumption for now.
Share price throwing up value
The stock is down 18% from its 52-week high of RM1.79, largely due to the overhang from the property cooling measures and lack of job flows. However, MRCB's appeal over the next few months is likely to gravitate to construction, while its longer-term property development prospects are anchored by PJ Sentral and Kwasa Damansara's MX-1 worth RM31.4bn in total incoming GDV.
Source: CIMB Daybreak - 19 November 2014, Full PDF Report
