MRCB exceeds expectations, long term prospects still favourable

KUCHING: Malaysian Resources Bhd (MRCB) reported better-than-expected results for the third quarter of 2016 (3Q16) and its long term prospects remained favourable.

In a report, the research arm of Affin Hwang Investment Bank Bhd (Affin Hwang Capital) said MRCB’s net profit of RM79.3 million in the first nine months of 2016 (9M16) exceeded expectations.

“We were surprised by the jump in property development earnings. Revenue increased five per cent year-on-year (y-o-y) to RM1.38 billion in 9M16, driven by higher property revenue.

“Core net profit fell 19 per cent due to higher operating expense and normalisation of tax rate (28.5 per cent in 9M16 compared to 12 per cent in 9M15),” it added.

The research team pointed out that MRCB achieved property sales of RM1.16 billion in 9M16, exceeding its RM1 billion sales target in 2016.

“Encouraging booking figures during the soft launch of its Kalista high-end landed residential project in Bukit Rahman Putra and Sentral Suites in KL Sentral will contribute to its higher sales target of RM1.5 billion in 2017.

“Unbilled sales of RM1.4 billion and a construction order book of RM5.2 billion will drive core earnings per share (EPS) growth 69 per cent y-o-y in the financial year 2017 estimate (FY17E),” it said.

Meanwhile, Affin Hwang Capital noted that MRCB saw asset disposal gains of RM44.4m from the sale of Sooka Sentral and RM2.8 million from the sale of its stake in a construction joint venture to Ekovest and these lifted MRCB’s bottom line in 9M16.

“However, this was lower than the one-off gains of RM259.3 million realised in 9M15,” it said, adding that MRCB’s shareholders have approved the proposed sale of Menara Shell to MRCB-Quill REIT for RM640 million for potential net gain of RM89 million.