- Maintain BUY on MRCB with an unchanged fair value of RM2.20/share (at a 20% discount to its RNAV). We hosted a luncheon for MRCB and institutional funds, and came away more upbeat over its future prospects.

- Firstly, the deal to inject Platinum Sentral into Quill Capita Trust (QCT) should be signed by mid-March. This could be a prelude to MRCB injecting more prime office properties in KL Sentral into QCT. Such a move would aid MRCB’s de-gearing efforts and enable it to reinvest its capital into more NAV-accretive deals.

- The status of the EDL Highway could finally be known by May, thus removing a key overhang on the stock. Together with the divestment of its 30% stake in DUKE for RM228mil, we understand that these asset monetisation initiatives (more likely to come moving forward) could reduce MRCB’s net debt by ~RM1bil.

- The High Court’s judgement on PJ Sentral could be known by month-end. A positive resolution will result in a significant lift to MRCB’s RNAV, given PJ Sentral’s high development potential (Phase 1 GDV: ~RM3bil).

- We foresee MRCB emerging as a front-runner for the Kwasa Damansara project. Kwasa Land, a unit of MRCB’s major shareholder EPF (39%), is the master developer. Tenders could be called in two months’ time.

- We are also positive on Penang Sentral (49% stake), primed as a future transport hub in the north, due to its high commercial appeal and strategic location. The group is in the midst of submitting a DO to kick-start the project.

- We expect MRCB's upcoming 4Q13 results to greatly improve QoQ (3Q13 net loss - RM111mil), as the risk of further provisions diminishes substantially. This sets the stage for a solid earnings turnaround; core net profit for FY14F is RM101mil (FY13F net loss: RM103mil).

- The market seems to under-appreciate MRCB's quiet but disciplined transformation to become a property-centric group with a cleaner balance sheet. To be sure, the stock is trading at a deep discount of 47% vis-a-vis its RNAV with a trough P/BV of only 1.4x.

- We recommend investors to accumulate MRCB before the investment tide turns positive ahead of sustained newsflow momentum. Our current valuations have not incorporated two major re-rating catalysts, i.e. PJ Sentral and Kwasa Damansara.

Source: AmeSecurities