INVESTMENT HIGHLIGHTS

• 6MFY18 Results below expectations

• Insipid results due to lower construction revenue

• Change assumptions

• Reaffirm BUY with an adjusted TP of RM1.09

6MFY18 Results below expectations. MRCB’s 6MFY18 normalised PATAMI of RM54.9m (+68.4% YoY) came in below expectations accounting for 27.1% and 33.0% of ours and consensus’ estimates respectively.

Insipid results due to lower construction revenue. The wide variance is due lower construction billings rate. But the prospects are healthy as the unbilled orderbook stands at RM5.1bn and its property division is embarking on exciting projects such as Sentral Suites (GDV: RM1.5bn) and 1060 Carnegie, Melbourne (GDV: RM305m)

Change earnings assumptions. We change our estimates. As for revenue; (i) FYE18 - RM1.61bn (-20.0%) and (ii) FYE19 - RM1.64bn (- 20.0%), and earnings; (i) FYE18 - RM145.6m (-28.9%) and (ii) FYE19 - RM164.0bn (20.0%).

Recommendation. Premised on that, we maintain our BUY call with an adjusted TP of RM1.09 per share which is based on SOP valuation.

Source: MIDF Research - 3 Sept 2018