Bandar M’sia revival could potentially unmask meaningful catalyst for MRCB
KUALA LUMPUR: The revival of the Bandar Malaysia project could potentially unmask meaningful catalysts for Malaysian Resources Corporation Bhd (MRCB).
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recalled that in January 2017, MRCB had entered into a non-binding memorandum of understanding (MoU) with Wondrous Vista Development Sdn Bhd and TRX City Sdn Bhd.
“The idea was to collaborate in developing an integrated transportation terminal at Bandar Malaysia which will house the terminus of the Kuala LumpurSingapore high-speed rail (HSR) line,” MIDF Research said in its notes yesterday.
After the termination of Bandar Malaysia in May 2017, the research arm said the agreement should have lapsed as it was only valid for six months.
“Following the project’s revival, we think that it could potentially unmask meaningful catalyst for MRCB.
“Whilst details are still scarce, we believe opportunities are ample given the latest gross development value (GDV) estimation of RM140 billion.
“Positively, it was mentioned by the Prime Minister that bumiputera participation and the use of local content will be given priority throughout the project.”
On that note, MIDF Research saw that MRCB is well positioned to participate in this project, adding to the group’s track record in building PJ Sentral and KL Sentral as a transportation developer.
Overall, MIDF Research highlighted that the group has recently won RM323 million worth of contract for the construction of SUKE highway.
“Accordingly, the amount was added to the previous unbilled jobs to arrive at RM21.8 billion of outstanding orderbook.
“The outstanding amount is huge, which will keep the group busy in the long term.”
For its construction division, however, the research arm believed a temporary drag could come from the delayed progress of LRT3 which will commence in the second half of financial year 2019 (2HFY19).
“While the concern should not be overlooked, we think the impact is manageable.”
At this juncture, MIDF Research maintained its ‘buy’ call on MRCB with a higher target price of RM1.05 per share, derived from its sum of parts (SOP) valuation.