- We maintain our BUY call on MRCB with an unchanged fair value of RM2.20/share. This pegs the stock at a 20% discount to its RNAV.

- MRCB announced that the KL High Court has dismissed with costs, PKNS’ claims against Nusa Gapurna and MRCB. This is in relation to PKNS’ suit against the two for alleged breach of shareholders agreement over stakes in PJ Sentral Development Sdn Bhd (PJSD).

- In addition, The Star reported that the courts have also allowed Nusa Gapurna's counter-claim for PKNS to sell its 30% stake in PJ Sentral to MRCB.

- This positive verdict is significant, as it may pave the way for MRCB to complete the acquisition of a 70% stake in PJSD.

- More importantly, this latest development represents a significant step forward for MRCB to finally realise the embedded value of PJ Sentral.

- PJSD is developing Phase 1 of its flagship PJ Sentral Garden City - a 40-acre integrated mixed-use project that has high development potential (plot ratio: 6x net).

- Phase 1 (GDV: ~RM3bil) comprises:- (i) five tower blocks along with a hotel collectively held in Lot 12; and (ii) the

Puncak Wangi land (Lot 8). The development is strategically located at the heart of PJ city, and is surrounded by matured neighbourhoods.

- Our channel checks indicate that two towers have been presold to MyIPO and MBSB for RM250mil and RM239mil respectively. This translates into record capital values of c.RM850psf within the area.

- On the other hand, we learn that Lot 8 would be occupied by Celcom-Axiata, which has pre-committed to a 21-year lease agreement reportedly worth ~RM300mil.

- Furthermore, any positive resolution to the PJ Sentral dispute could pave the way for the future injection of another 28 acres under Phase 2 into the MRCB stable with an estimated GDV of ~RM7bil.

- A favourable outcome to PJ Sentral’s legal impasse would likely kick-start a fresh share price re-rating cycle for MRCB –with further upside from this NAV-accretive project.

- This should narrow the deep discount of 40% that MRCB is trading vis-a-vis its RNAV. Our current forecast does not include potential future contributions from PJ Sentral and the upcoming Kwasa Damansara project.

Source: AmeSecurities