KEY INVESTMENT HIGHLIGHTS

• MRCB posted RM1.32b revenue in FY19, -29.5%yoy

• Construction segment shown a significant improvement

• Property division booked RM195m revenue in 4Q19, +22.3%yoy

• 1sen/share dividend declared

• Reiterate BUY with a lower TP of RM0.73

MRCB posted RM1.32b revenue in FY19, -29.5% lower than the same period last year on the back of the Group’s major high-rise residential development projects still being in the early phase of construction. Moreover, the Group earned a PATAMI of RM23.7m (- 76.5%yoy) in FY19. The core earnings came in below expectations, as it constitutes only 58.9% and 73.1% of our and consensus full year estimates.

Construction segment shown a significant improvement. This segment registered RM258.7m revenue in 4QFY19, a jump of +31.1%yoy from RM197.4m in 4QFY18. The better performance was driven by the following construction projects, namely the Mass Rapid Transit Line 2 Package V210, Damansara-Shah Alam Elevated Highway Package CB2, EPF Headquarters at Kwasa Sentral, Sungai Besi-Ulu Kelang Elevated Expressway Package CA2, construction works of the property development projects and several smaller civil engineering projects in the Klang Valley. It is worth pointing out that, as at December FY19, MRCB order book stood at a hefty RM21.8b while its unbilled construction order book stood at RM20.7b.

Property division booked RM195.3m revenue in 4Q19, +22.3%yoy. The key contributors for the revenue were on-going development projects, namely Sentral Suites in KL Sentral, the 9 Seputeh mixed residential development in Jalan Klang Lama and the MyIPO office tower in PJ Sentral Garden City, the completed MBSB office tower in PJ Sentral Garden City, Sentral Residences and Kalista Park Homes in Bukit Rahman Putra. It must also be highlighted that the Group has cumulative unbilled sales totaling RM1.6b.

Source: MIDF Research - 27 Feb 2020