INVESTMENT HIGHLIGHTS

• 9MFY16 earnings gives mixed-results

• Earnings bolstered by ongoing projects

• Reaffirm our earnings estimates

• Hence we maintain our BUY stance with an unchanged TP of RM2.08

Mixed results from 9MFY16’ earnings. Normalized 9MFY15 PATAMI was higher at RM77.3m (+80.2%YoY). The increase in earnings accounted for only 66.0% of ours but registered 80.2% of Street’s estimates of full year forecast respectively. The mixed-results is attributable to our higher forecast of revenue recognition from ongoing developments such as MX-1 in Kwasa Damansara and Kuala Lumpur Sports City. We reckon that the revenue transfer will expand in upcoming quarter and MRCB will be able reach our target estimates and even out their weakness.

Nonetheless, its 9MFY16 earnings underpinned by ongoing projects. 9MFY16 numbers was mainly attributable to projects clinched such as; (i) PDP for LRT3, (Amount: RM5.75bn) (ii) KL Sports City, (Amount: RM1.6bn), (iii) Cyberjaya City Centre, (Amount: RM269m). (iv) Nine Seputeh Phase 1, (GDV Amount: RM860m)

Impact on earnings. Nonetheless, we maintain our earnings forecast for FYE16 and FYE17 at this juncture based on the outstanding RNAV of RM2.6bn and prospective sales of MX-5 and C-8 land in Kwasa Damansara, PDP role for LRT3 and the development of Kuala Lumpur Sports City in Bukit Jalil. Additionally, MRCB’s involvement for Kuala Lumpur PWTC project will potentially lift its construction orderbook by 27.5% from RM5.4bn year-to-date to RM6.9bn in FYE2017.

Maintain BUY. We maintain our BUY call with an SOP based TP of RM2.08 per share. Our TP reflects the DCF of toll concession, RNAV of property development projects; book value of investment properties and earnings multiples over recurring businesses and the enlarged share capital pursuant to recent share placement exercise

Source: MIDF Research - 1 Dec 2016