MRCB (BUY)

CEO resigns

• The CEO of MRCB, Datuk Mohamed Razeek Hussain, hastendered his resignation, citing reasons of joining another organisation. His last day with the company will be on Aug 17^th.
• Short term negative… This development will not go down well with investors as the company has yet to officially announce Datuk Razeek’s replacement or interim CEO. Hence, we believe that for the short term, share price may react negatively, thus posing an opportunity for investors to accumulate the stock.
• Fundamentals still intact… MRCB’s fundamentals are still intact as the daily operations within the divisions will remain as normal under the respective divisions leaders’ purview, while key decisions will be made by the board of directors in the absence of the CEO.
• Target Price of RM2.50 based on Sum-of-Parts Valuation maintained.

Source: Hong Leong Investment Bank Research - 25 July 2012