RHB Research raised its call on builder Malaysian Resources Corporation Bhd (MRCB) to "trading buy" from "market perform" on the back of stronger profits.

"MRCB's near-term earnings visibility is good on the back of strong construction profits underpinned by successful variation order claims," said RHB in a note on Monday.

RHB said risks include contracts coming in below target, rising costs and further delays in developing the country's Rubber Research Institute, where MRCB is eyeing a RM1 billion (US$316.51 million) infrastructure deal.

Ahead of the Malaysia's general elections, RHB expects the share price performance of construction stocks to be capped due to higher risk premiums.

"We are not overly enthusiastic on construction stocks as we believe their share price performance is likely to be capped over the next 6-9 months as the market continues to demand a higher risk premium ahead of the general elections," RHB said.

"Nonetheless, we now see value in MRCB after a steep decline in share price," RHB added.

RHB raised its fair value price to RM2.02 from RM1.83. -- Reuters