According to sources, Malaysian Resources Corp Bhd (MRCB) is tipped to refurbish the various sports facilities at the National Sports Complex (NSC) in  Bukit  Jalil,  including  the  17-year-old  Bukit  Jalil  Stadium.  The refurbishment could cost up to RM1bn and MRCB will get land parcels in the  vicinity  of  NSC  for  development  if  the  proposal  is  approved  (Source: The Star).

Comments:  Securing  the  project  will  lift  MRCB’s  construction  order  book and grow its land bank with good development potential as Bukit Jalil will be connected by the Light Rail Transit extension project being undertaken currently.  MRCB’s  forte  is  in  developing  public  transportation  hubs  and property developments linked by rail systems and we believe it is in a good position to secure the project. The attractiveness of the deal will depend on pricing for the land.

The  key  challenge  for  MRCB  is  structuring  the  financing  for  the  stadium refurbishment project with property development land as payment-in-kind, given its high net gearing of 1.1x as at end-March. But it is positive to note that MRCB has been reducing its net gearing through asset divestments. We reiterate our BUY call with RNAV-based target price of RM2.26.

Source: Affin Hwang Capital Research - 1 Jul 2015