• Keep BUY and MYR0.86 TP, 65% upside and 2% yield. Malaysian Resources Corp signed a Memorandum of Agreement (MOA) with Ipoh Sentral SB to formalise the collaboration to develop a transit-oriented development (TOD) called Ipoh Sentral. We view the latest development to be positive - adding up to MRC's portfolio in TOD projects such as KL Sentral, PJ Sentral and Penang Sentral.
• Project background. Ipoh Sentral entails the development of land (c.67 acres) situated near the Ipoh railway station over a phased period of 20 years with planning to begin in 2025. The GDV of Ipoh Sentral is expected to be MYR6.3bn with the first phase (2.6ha) involving improvements to landscaping and recreational elements, while preserving the heritage and cultural elements and the second phase (24.7ha) encompasses serviced apartments, offices, commercial spaces and hotels.
• Better connectivity. We are of the view that the Ipoh Sentral project may enhance Ipoh's connectivity as it is located within a 6km range from key access points namely Sultan Azlan Shah Airport, the North-South Expressway northern route, Medan KIDD bus terminal and the Keretapi Tanah Melayu Ipoh station. Major developers like Sunway (SWB MK, BUY, TP: MYR5.75) could also indirectly benefit as it has earmarked an additional MYR4bn to expand its 1350-acre Sunway City Ipoh township in Tambun. The development of an integrated transport hub in Ipoh may likely drive further interest for potential property buyers to explore Ipoh.
• Ipoh Sentral could be a plus point for foreign/local investors looking to expand in Perak or Ipoh in particular. Industrial parks such as the planned Silver Valley Technology Park (roughly a 40-minute drive from central Ipoh) may benefit from this proximity with Ipoh Sentral by attracting talent from other states.
• No changes to our estimates pending further agreement details and conditions precedent for the MOA to be fulfilled within two months from the date of the MOA or any extended period mutually agreed by the parties. Hence, our SOP-derived TP of MYR0.86 remains. Our TP also which bakes in a 4% ESG premium. Valuation appears undemanding as the stock is now trading at 27x FY25F P/E, or -0.5SD from its 5-year mean.
• Separately, we believe MRC's withdrawal from the consortium led by Berjaya Rail for the Kuala Lumpur-Singapore High Speed Rail will enable the group to better focus on existing and upcoming projects. These include the redevelopment of KL Sentral and Shah Alam sports complex (>MYR1bn in total), Bukit Jalil Sentral (long term potential GDV of >MYR10bn) and the reinstatement of five Light Rail Transit 3 stations (c.MYR2bn), which may continue to attract interest in the stock.
• Key risks: Slowdown in the property market and sluggish project rollout.

Source: RHB Research - 24 Jan 2025