MGB has bagged a high-rise construction job from its parent company, LBS Bina Group for RM167.8m. The contract’s scope of work includes the construction of 36-storey service apartments with facilities floor, parking space and basement parking. This new job is expected to contribute c. 5-6% per annum on average to the Group’s earnings during the contracted period of 27 months, assuming a high single digit margins. Works are expected to begin in 1QFY24 and complete by 4QFY26. To-date, the Group has successfully replenished its orderbook by RM371.4m, marking 74.3% of our FY23 job replenishment target of RM500m. While we have anticipated 1-2 job wins by late-FY23, the Group has replenished 56% out of our expectation of RM300m new wins so far. Nonetheless, we maintain our earnings forecast as this makes up a part of our FY23 orderbook replenishment assumption of RM500m. We retain our Outperform call with an unchanged SOTP-based TP of RM1.16, pegged at 11x PER.

• On Bayu Hills. The project involves the development of serviced apartment comprising of 38 floors with a total of 642 units, 7-storey elevated carpark, 1-storey facilities floor, lobby space and 2 levels of basement parking. Construction works to begin in 1QFY24 and completion targeted by 2QFY26 (within 27 months).

• Orderbook rose by 16%. Accounting for this job win, the Group’s existing outstanding orderbook rose by 16% to RM1.2bn, providing earnings visibility for the next 2-3 years. Our projections show that this job would contribute about RM4.2m per annum on average, from FY24-FY26F, assuming a high single digit pre-tax margins.

• Our view. The Group’s YTD job replenishment now at 74.3% of our FY23 orderbook replenishment assumption of RM500m. While we have anticipated 1-2 job wins by late-FY23, the Group has replenished 56% out of our expectation of RM300m new wins so far. That aside, we are anticipating its first contract award from its Saudi Arabia venture by 1QFY24 – current progress on the factory upgrade is at about 60-70% completion. On property side, MGB has an upcoming launch worth RM107m GDV at Cameron Highland, Pahang in 2QFY24.

Source: PublicInvest Research - 15 Dec 2023