MRCB's orderbook set to rise above RM1b

PETALING JAYA: Malaysian Resources Corporation Bhd's (MRCB) recent building job in Johor is estimated to bring its orderbook to more than RM1 billion, according to research firms.
The RM197.4 million contract to build the 30-storey JLand Tower at Komtar Johor Bahru Convention Centre is the first contract won by MRCB for 2014.
With this new project, MIDF Research said MRCB's outstanding order book will rise by 18.2% to RM1.3 billion from RM1.1 billion.
"We are not surprise with the job win as it has already been guided by the management and it falls within our new jobs replenishment assumption for FY14 of RM500 million," it said in a note yesterday.
It said earnings contribution to the group from this contract for this year is relatively small.
"Although MRCB's contract flow has been rather dry this year, we expect the shortfall to be offset by additional earnings from the completion of its key acquisitions," it said, adding that MRCB is now on a stronger footing after completing several key acquisitions namely 51% equity interest in Penang Sentral Sdn Bhd, 40% in Excellent Bonanza Sdn Bhd and further 30% stake in PJ Sentral.
In addition, it was awarded RM8 billion project MX-1 recently on top of its current estimated mixed property development projects gross development value of more than RM20 billion over the next 10 years.
MIDF said these are potential drivers which will contribute to MRCB's stronger earnings growth ahead. In addition, further monetisation of its investment assets in KL Sentral via REITs will improve its balance sheet by reducing its gearing as well as enable it to fund some of its robust projects on hand internally.
HLIB Research, which maintained MRCB's target price at RM1.97 with a buy recommendation also estimated that the new contract win would bring MRCB's order book to more than RM1 billion.
"We are maintaining our view that the new management will be able to turnaround MRCB's operations and positive on the de-gearing exercise. Hence, we maintain our long term buy call giving its strategic landbank development," it said.
On other potential job wins, HLIB Research said MRCB is one of the four shortlisted parties for the waste-to-energy Kepong incinerator project.