Renewed interest in MRCB

Stock rises as company cuts debts, maintain dividend payout

PETALING JAYA: Malaysian Resources Corp Bhd (MRCB), the developer of the iconic transport centre of KL Sentral, saw its share price rising to among its highest levels since 2014 yesterday, following strong buying interest in the company.

Shares of MRCB closed three sen or 2% higher at RM1.50 from last Friday. The counter had risen to an intraday high of RM1.53.

MRCB’s share price has been flirting above the RM1.50 level since February, a level that was last seen in October 2014.

Its warrant was one of the most-traded counters, closing 16.7% higher at 14 sen with 88.2 million units changing hands.

Dealers said that the fresh outlook on MRCB was driven by the company reducing its gearing level, which was cut to almost half in 2016, as well as maintaining its dividend payout.

“MRCB’s share price has been in the doldrums for almost two years despite sitting on a vast landbank and fat orderbook. One of the factors is the company’s gearing level,” said an analyst.

According to the latest results for the financial year ended Dec 31, 2016 (FY16), MRCB’s gearing stood at about 0.73 times compared to 1.2 times in 2015.

The company had said before that it wants to see the gearing come down to 0.5 times.

The analyst said that the potential disposal of MRCB’s stake in the Eastern Dispersal Link (EDL) highway and a slew of new construction projects would provide further catalysts for the stock

“The sale of the EDL would reduce the company’s gearing significantly, and provide more space for the firm to take on more property development projects on its huge landbank,” a market observer said.

Last October, MRCB announced that it had received two interested parties to acquire stakes in MRCB Lingkaran Selatan Sdn Bhd, the concession holder of the EDL expressway. The parties were PLUS Malaysia Bhd and ZJ Advisory Sdn Bhd.

Another catalyst for the company is the prospect of landing the job to redevelop the KL Putra World Trade Centre (PWTC).

Last year, Prime Minister Datuk Seri Najib Tun Razak announced that MRCB would undertake the job to redevelop the KL PWTC.

The project comprises the construction of new office buildings, the Putrade Hall and a six-star hotel with a 70-storey tower, as well as the redevelopment of the PWTC’s halls.

The 70-storey tower, which will be built on the Putra Bus Terminal site with a floor area of 1.2 million sq ft, will also become the new Umno headquarters building.

The company had said in its previous announcements that the sale of the EDL was something that it was “seriously” looking at.

For this year, MRCB has set a target of achieving between RM1bil and RM1.5bil in property sales from residential development projects next to KL Sentral, known as Sentral Suites.

Its construction orderbook is at RM 7bil and among the jobs is as Project Delivery Partner for the Light Rail Transit 3 project with George Kent Bhd.

CIMB Research in a recent report said that the medium-term catalysts for MRCB would be deal-driven and domestic contract wins.

“Potential renewed developments on the memorandum of understanding between both Governments to explore opportunities for a transport-oriented development in Bandar Malaysia’s phase 1 could be positive for the stock,” it said.

The research house reckons that the Celcom Tower would likely be the next target for disposal by MRCB.

For FY16, MRCB’s net profit fell 19% to RM 264.36mil from RM 330.4mil a year earlier.

Revenue for the period, however, increased by 42% to RM2.4bil from RM 1.67bil previously.