TRC Synergy receives award in case against Brunei board

KUCHING: TRC Synergy Bhd (TRC) has obtained the final award from the Singapore International Arbitration Centre against Brunei Economic Development Board in relation to the Brunei International Airport modernisation project.

Under the judgement, TRC is awarded B$13 million plus simple interest of 5.33 per cent per annum from October 23, 2017 until payment date; B$3.3 million plus simple interest of 5.33 per cent per annum from May 23, 2018 until payment date; S$2.2 million for legal and other costs and S$75,000 for arbitration costs.

Hong Leong Investment Bank Bhd (HLIB Research) pegged the outcome as good, noting that TRC will now focus on successful enforcement of the above award.

“Based on our estimates, the above award including accrued interest amounts to approximately RM75 million, making up 46 per cent of market capitalisation,” it said in reviewing the update.

“The company will now focus on successful enforcement of the above award.

“According to management, at present TRC does not owe subcontractors or suppliers for the Brunei project.

“Our estimated RM75 million could therefore be close to the nett amount to be received and retained by the company.”

To note, TRC has not declared its intention to distribute the proceeds as special dividends pending payment but HLIB Research believed that based on current working capital needs and NCPS of RM0.29, there could be one going forward.

This is assuming a reasonable 10 to 30 per cent pay-out ratio translates to yields of 4.6 to 13.7 per cent.

“Despite potential uplift to the stock on a total return basis, we retain our hold rating and unchanged target price of RM0.36 per share considering the company has not cemented its intention to distribute proceeds and uncertain earnings prospects due to infrequent contract wins.”