Mitrajaya’s first building win of the year neutral, orderbook stands at RM1.8 billion

KUCHING: Mitrajaya Holdings Bhd’s ( Mitrajaya) first win of the year, in the form of a RM273.8 million building contract, has garnered neutral views from analysts.

Mitrajaya’s board of directors had announced on Bursa Malaysia last Friday that the group’s wholly owned subsidiary Pembinaan Mitrajaya Sdn Bhd (PMJ) accepted a contract from STF Resources Sdn Bhd for the appointment of PMJ as the building contractor for the construction and completion of ‘A Centre of Excellence’.

The contract sum for the building job amounted to RM273.8 million and is expected to be completed by April 2019.

The research arm of Kenanga Investment Bank Bhd ( Kenanga Research) was neutral on Mitrajaya’s first win of the year as it was well within Kenanga Research’s financial year 2017 estimate (FY17E) replenishment target of RM800 million - making up 34 per cent of its target with a remainder of RM527 million to be achieved.

Assuming profit before tax ( PBT) margins of 11 per cent, the research arm expected this building job to contribute circa RM11.3 million to Mitrajaya’s bottom- line for the next two years.

According to Kenanga Research, Mitrajaya’s outstanding orderbook currently stands at circa RM1.8 billion, providing earnings visibility for another circa 1.5 years.

For FY17, the research arm had targeted a replenishment of RM800 million, below management’s target guidance of RM1 billion.

“For their property arm, sales for their ongoing Wangsa 9 residency project remain sluggish with phase 2 registering only circa 45 to 50 per cent take-up since launch in November 2014.

“That said, Wangsa 9 unbilled sales of circa RM150 million will provide visibility for another 1.5 years,” Kenanga Research said.

The research arm added that Mitrajaya’s South Africa division will see unbilled sales of Rand22 million ( RM7 million) recognised progressively upon completion of the transfer of ownership in FY17.

Post award, Kenanga Research maintained its FY17-18E earnings of RM102 million and RM99 million, respectively.

All in, Kenanga Research reiterated ‘outperform’ with an unchanged target price of RM1.49 per share.