Malaysian Resources Corp Bhd
(Sept 7, RM0.99) 
Maintain buy with a higher target price (TP) of RM2.21: Malaysian Resources Corp Bhd (MRCB) and its 50:50 joint-venture partner, George Kent Bhd, were appointed by Prasarana Malaysia Bhd as the project delivery partner for the construction and completion of light transit rail line 3 (LRT3), from Bandar Utama to Johan Setia, Klang.

The LRT3 project is worth RM9 billion. This translates into RM270 million for MRCB based on a 6% management fee from the project and its 50% stake. The job is scheduled to start in the second half of 2015 with a duration of 60 months. 

Its order book increased to RM839.5 million from RM569.5 million. We are “positive” on the award of the contract as it exceeded our replenishment target for engineering and construction jobs. 

We made upward revisions to our financial year ending Dec 31, 2015 (FY15) and FY16 estimate earnings forecasts. We maintain our “buy” stance with an adjusted TP of RM2.21 based on sum-of-parts valuation. 

We are maintaining an upbeat outlook for MRCB due to a government policy which encourages transit-oriented development which is backed by the ever expanding mass rapid transit and LRT network infrastructure for Greater Kuala Lumpur. — MIDF Research, Sept 7

This article first appeared in digitaledge Daily, on September 8, 2015.