MRCB is no more a ‘single-project’ company
Firm has number of ongoing jobs to help bolster earnings
By EUGENE MAHALINGAM KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) sees better sustainability in its business operations going forward despite the current property market glut and potential impact of Pakatan Harapan’s pledges to review certain infrastructure projects.
Executive director Mohd Imran Mohd Salim said MRCB has been implementing “prudent and sustainable approaches” over the years and has a number of ongoing projects that can help bolster the company’s earnings.
He also emphasised that the victory by the Pakatan would not have an impact on MRCB’s ongoing projects.
“It will not have an impact, as the nature of our developments is that they are transit-orientated developments (TODs). We’re a transport-orientated developer and we’re mostly an urban developer and the scale of our development takes between 15 years and 20 years,” he said after the company’s AGM and EGM yesterday.
“And we’re not just looking into housing developments. We’re looking into integrated developments. We have different product mixes.”
MRCB’s chief corporate officer Amarjit Chhina said MRCB has gone beyond being a “single-project” company.
“The problem before was that there was a question of sustainability. We were a one-project company, KL Sentral. There wasn’t much of a construction business and the gearing was up towards 200%.
“But over the years, we’ve been trying to make MRCB sustainable. Today, we have projects with a gross development value of RM57bil. On the property side, 80% comprise TODs.”
Amarjit also said MRCB’s construction business has been registering good growth over the years.
“Our construction business has grown from a negligible amount. Our external orders stand at RM6.2bil, of which RM4.9bil is unbilled. With the initiatives in place, our gearing was down to 5.3 times at the end of last year.”
He added that the proposed disposal of the Eastern Dispersal Link (EDL) would help reduce the company’s gearing further.
Imran said MRCB hopes to dispose of the EDL by year-end.
“Before the election, the agreement was to go into mutual termination mode. We’ve given the highway back to the government, who is operating it under the Public Works Department. We were supposed to sit down with the government and come up with a transparent formula for all parties to exit fairly and reasonably.”
According to reports, MRCB has spent RM1.2bil to develop the 8.1-km EDL.
“We can’t provide a value for the disposal, but we’re hopeful of paying off most of our debts,” said Imran.
He also said MRCB was excluded from most of the country’s mega-infrastructure projects - which have since come under question following the win of the Pakatan coalition.
“We have no exposure to the East Coast Rail Link and we never participated in the mass rapid transit line 3 project. The only project we are a part of is the Kuala LumpurSingapore high-speed rail. However, there is no impact financially because the project has not started.”
MRCB posted a net profit of RM167.6mil, or 6.56 sen a share, for the full year ended Dec 31, 2017, as revenue climbed to RM2.82bil. Amarjit said the company’s financials were “in great shape”.
“Only 23% of our construction orderbook is from the government. We have around RM2.9bil in terms of tenders at the moment.”
Imran, meanwhile, said the company had a limit in terms of how much it wanted to grow its orderbook.
“We have critical mass. We can’t just keep growing our orderbook. It’s at RM6.8bil to date. As long as we maintain between RM5bil and RM8bil, our ecosystem is sustainable.”
For its current financial year, Amarjit said MRCB expects its construction division to contribute a substantial portion of earnings.
“A number of new projects are starting, that’s why we have a portfolio approach. So, construction will bear some of the property slack this year and in other years, the property division will come through when construction is a little bit more restricted.”
Imran pointed out that the property and construction sectors were cyclical in nature.
“The property market is soft and we’re hopeful that it would pick up over the next two years. With the right product and the right locality, I think we can compete aggressively.
“We will aggressively tender, whether it is government-linked, private or overseas. As long as there is a tender, we will try,” he said.