KUALA LUMPUR (June 19): UOB Kay Hian Securities (M) Sdn Bhd is keeping its positive and "Buy" call on Malaysian Resources Corp Bhd (MRCB), amid the expiry of its group managing director Tan Sri Mohamad Salim Fateh Din's contract.

According to UOB Kay Hian, Mohamad Salim, 61, will retire towards end-June.

A self-taught entrepreneur, Mohamad Salim was inducted into MRCB's board of directors on Sept 2, 2013, shortly after the entry of his personal vehicle, Gapurna Sdn Bhd, as one of the major shareholders in MRCB.

As at March 15, Mohamad Salim, via Gapurna Sdn Bhd, holds a 16.61% stake in MRCB, which owns large-scale property development projects in Kuala Lumpur.

"While we wait for more details, our positive view of MRCB remains unchanged. MRCB remains a deep value stock with high asset monetization potential, riding on controlling shareholder Employees Provident Fund (EPF)," UOB Kay Hian's Vincent Khoo said in a note to clients today.

Currently, the EPF holds a 34.87% stake in MRCB, while pilgrim fund Lembaga Tabung Haji is the third largest shareholder with a 7.14% stake.

In June, UOB Kay Hian is expecting MRCB to complete the 80% stake sale in Rukun Juang Sdn Bhd to the EPF at RM421 million, which will be "a major de-gearing exercise".

As at end-March, MRCB's total borrowings stood at RM3.38 billion, equivalent to a gearing ratio of 0.58 times.

Currently, Rukun Juang is regenerating facilities related to the national sports stadium in Bukit Jalil, in exchange for three parcels of land totalling 76.14 acres, which has potential to be developed into a RM21 billion mixed development.

In the near term, UOB Kay Hian is targeting MRCB shares to reach a fair value of RM1.01, from its current trading price of around 64.5 sen.

"Our target price is based on a 20% discount to our sum-of-the-part valuation of RM1.26 per share, implying 24.3x 2019F (forward earnings)," it added.