• HLIB maintains a BUY rating on MITRA with an institutional TP of RM1.89 or 33% potential upside. Orderbook remains healthy. Mitrajaya has managed to secure RM434m worth of jobs YTD. This brings its orderbook to RM1.7bn, implying a cover of 2x on FY16 construction revenue. Management is gunning to hit RM1bn in new job wins this year. With the construction sector outlook remaining sanguine as the government’s ramps up the country’s infrastructure development, we expect the orderbook replenishment target to be met.

• Slower for property. Whilst property revenue (ex-land sale) increased +27% QoQ and +14% YoY, PBT fell by -24% and -12% over the same comparable period. Nonetheless, we expect this to pick up in the coming quarters as Wangsa9 progresses further. Unbilled sales (mostly Wangsa9) stands at RM204m, translating to a cover of 2x on FY16 property revenue. Whilst earnings may have hit a temporary plateau, we expect growth to resume in FY18. Valuations are undemanding at FY17- 18 P/E of 9.5x and 8.1x respectively. Mitrajaya’s net land value of RM638m backs up 67% of its market capitalisation .

• Bullish downtrend line breakout. Technically, MITRA’s uptrend channel remains intact and we believe the stock is poised for a LT objective at RM1.72. In the near term, on the back of its bullish downtrend resistance breakout coupled with positive indicators, share prices are likely to test RM1.46 (24 May high) and RM1.52 (161.8% FR) upside resistances. On the flip side, key supports are situated at RM1.39 (38.2% FR) and RM1.37 (50-d SMA). Cut loss at RM1.34.

Source: Hong Leong Investment Bank Research - 6 Jul 2017