Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 5): CIMB Research today upgraded Malaysian Resources Corp Bhd (MRCB) shares to "add" from "reduce" after Malaysia's Budget 2019 set aside RM1.3 billion as full compensation to MRCB for the abolishment of toll collection on MRCB's 100%-owned Eastern Dispersal Link (EDL).

CIMB analyst Sharizan Rosely said in a note that the research house had also raised its target price for MRCB shares to 90 sen from 65 sen previously. At Bursa Malaysia, MRCB shares rose 2.5 sen to 78.5 sen at 2:31pm.

"We consider MRCB as a beneficiary of Budget 2019. One of the key infra takeaways relating to tolled highway concessions is the setting aside of RM1.3 billion as full compensation to MRCB for the abolishment of toll collection on the 100%-owned EDL (8.1km, 34-year concession) and the termination of EDL's concession agreement.

"This news is positive and is long overdue, particularly clarity on the full settlement sum, which has never been officially revealed. The new government's acknowledgement of the RM1.3 billion compensation to MRCB, in our view, should revive the long-drawn-out negotiations on EDL's mutual termination agreement, which commenced 10 months ago [on] Jan 18. With this new milestone, we believe there is a fair chance that a final resolution/agreement on the EDL could be expedited and reached by end-2018," Sharizan said.

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