MRCB’s positive on fixed rights issue, Larkin stadium job garners neutral reaction

KUALA LUMPUR: Malaysian Resources Corporation Bhd (MRCB) is positive on the fixed rights issue while the group’s Larkin stadium job win has garnered a neutral reaction.

Following the announcement of MRCB’s price fixing at RM0.79, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) raised its financial year 2018 estimate (FY18E) core earnings by 49 per cent after factoring in the potential interest savings from the proceeds of the entire rights issuance exercise, while keeping its FY17E earnings unchanged.

“We are positive with the rights issuance exercise as it brings MRCB back into a better financial footing coupled with the potential sale of EDL highway which would be an upcoming catalyst for the stock,” the research arm said.

On the stadium job in Larkin, amounting to RM58.9 million, Kenanga Research was neutral on the contract award win as it was within the research arm’s order-book replenishment assumption of RM1 billion.

“To-date, MRCB has won RM467.9 million worth of jobs, making up 47 per cent of our order-book replenishment of RM1 billion,” it said.

Apart from the Larkin stadium job, MRCB also announced the contract win for MRT2 station works (package S210) totalling to RM145.8 million which had no impact to Kenanga Research’s FY17-18E earnings.

This was because the research arm had already factored this in its estimates given that work package S210 is part of package V210 worth RM648 million that MRCB secured last year.

All in, Kenanga Research maintained its ‘outperform’ call on MRCB.