MRCB advances on property acquisition news

KUALA LUMPUR: Shares of Malaysian Resources Corp Bhd (MRCB) rose to a high of RM1.78 in late morning on Monday on news that it was on the lookout to acquire property and that it could clinch contracts under the KL Mass Rapid Transit (KL MRT).

At 11.02am, it was up five sen to RM1.78. There were 2.31 million shares done at prices ranging from RM1.75 to RM1.78.

The FBM KLCI was down 0.11 of a point to 1,624.83. Turnover was 284.77 million shares valued at RM250.53mil. There were 278 gainers, 190 losers and 277 counters unchanged.

CIMB Equities Research said on Monday it was maintaining a Trading Buy on MRCB with a price target of RM2.02 on news that MRCB was reportedly looking to acquire property developer Nusa Gapurna.

"While talks are still preliminary, this is a positive surprise and will renew sentiment on the stock. The injection of the 60-acre land bank locks-in a new earnings stream after KL Sentral," said the research house.

CIMB Research said its target price is still pegged to a 30% discount to RNAV.

UOB Kay Hian Malaysia Research had a Buy on MRCB with a target price of RM2.03.

It said that there was a possibility of MRCB acquiring other developers in the near to medium term, given that MRCB's prime landbank is running low (KL Sentral is at maturity stage).

"If so, we believe MRCB will "marry" a partner with sufficient prime landbank (preferably in the Klang Valley), good track record and most importantly, the partner should have good working relationship with the Employees Provident Fund (EPF)," it said. The EPF owns 42% of MRCB.

"Our preliminary analysis focuses solely on Gapurna's three main projects on hand - the PJ Sentral Garden City, Seputeh land and Subang land, which collectively offers a projected gross development value (GDV) of RM12bil spanning over 15 years," it said.

UOB Kay Hian Research said the largest was PJ Sentral Garden City situated on a 40-acre land parcel in Section 52, Petaling Jaya, and construction was expected to commence in the first quarter of 2013.

"Assuming an average take-up rate of 75% and a net margin of 15% (after imputing finance cost from the acquisition), the NPV enhancement is RM725mil or 52 sen a share," it said.

A local newspaper said MRCB was expected to win a contract worth about RM1bil this week for the Sungai Buloh-Kajang (SBK) MY Rapid Transit (MRT) line.

If awarded, this will be the first railway-related job for MRCB this year.

The report said MRCB also won a RM1.33bil contract for the Ampang light rail transit (LRT) extension project in August 2011. The MRT contract is expected to boost MRCB's existing order book to more than RM2.5bil.

By The Star