KUALA LUMPUR (Jan 14): Shares of Malaysian Resources Corporation Bhd (MRCB) rose 5.22% at the midday break on Wednesday after it announced settlement of the remaining balance for the acquisition of Gelangang Harapan Construction Sdn Bhd (GHC), the main contractor for two new development projects in Petaling Jaya.

At 12.30pm, the stock rose 6 sen to RM1.21 with 2.58 million shares done.

Yesterday, following approval of land grants for projects on Lot 1 and Lot 2 in Section 26, Petaling Jaya, and the appointment of GHC as the main contractor for the development,  MRCB (Fundamental: 0.5, Valuation: 1.2) announced that it would settle the remaining RM60.9 million balance purchase consideration for the acquisition of GHC.

MRCB also announced it had paid RM20 million in cash and allocated 26.4 million of its shares at RM1.55 each coupled with 7.5 million warrants to Gapurna Sdn Bhd, as nominated by GHC.

An additional consideration of RM9.1 million will be settled through the issuance of 5.9 million MRCB shares at RM1.55 each and 1.7 million warrants when the land grant condition in respect of the Filem Negara land is fulfilled and GHC is appointed the contractor, Affin Hwang Investment Bank Bhd analyst Ong Keng Wee said in a note today.

Ong said although the issuance of additional shares and warrants would dilute the research firm’s forecasts of financial year 2014 to financial year 2016 (FY14 to FY16) earnings per share (EPS) of MRCB, the share price of MRCB is now more attractive.

Ong maintained his “buy” call on the stock with an unchanged target price (TP) of RM2.26.