HLBank Research Highlights

MRCB - Bags building job in Johor

HLInvest
Publish date: Tue, 14 Oct 2014, 02:53 PM
HLInvest
0 12,263
This blog publishes research reports from Hong Leong Investment Bank

News 

MRCB  announced  that  it  has  been  awarded  a  RM197.4m contract  from  Johor  Land  to  construct  the  30-storey  JLand Tower  at Komtar JBCC,  Johor  Bahru.

Construction  duration  is  for  24  months  and  scheduled  for completion by Nov  2016.

Comments 

First  job  win  for  the  year.  This  recent  award  marks MRCB’s  first  contract  win  for  2014,  after  a  lull  period  of  1 year.  We  estimate  that  this  contract  win  would  bring  its orderbook  to  ~RM1bn  (after  accounting  for  estimated  burn rate  in  3Q),  implying  a  decent  2.6x  cover  on  FY13 construction revenue.

Gunning  for  incinerator  job.  Looking  ahead  on  other potential  job  wins,  MRCB  (in  a  JV  with  Hyundai  Rotem)  is one  of  the  4  shortlisted  parties  for  the  waste-to-energy Kepong  incinerator  project.  The  1,000  tonne  per  day incinerator  is expected to cost RM800m.

MX-1  the  ke y  catalyst.  Commencement  of  the  MX -1 parcel in  Kwasa  Damansara,  in  which  MRCB  will  have  a  70% stake,  is  the  next  catalyst.  The  MX -1  parcel will perhaps be the  most  important  component  of  the  Kwasa  Damansara development  as  it  is  the main town  centre covering 64  acres with an estimated RM8bn GDV.

Risks 

  • Execution  risk;  Regulatory  and  political  risks;  rising  raw material  prices  and Unexpected downturn in the construction and property  cycle.

Forecasts 

  • Maintain.

Rating  BUY

  • 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.

Valuation 

  • Target  Price  maintained  at  RM1.97  based  on  Sum-of-Parts valuation

Source: Hong Leong Investment Bank Research - 14 Oct 2014

Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment