KUALA LUMPUR: The government's decision to continue with the construction of the Light Rail Transit 3 (LRT3) and compensate for the Eastern Dispersal Link (EDL) has cleared the uncertainties in Malaysian Resources Corp Bhd (MRCB), says AmInvestment Bank Research.
The research house maintained its hold call on MRCB with a revised fair value of 82 sen per share from 80 sen previously.
"We maintain our FY18-FY20 earnings forecasts. The FV upgrade is to reflect a higher valuation for the Eastern Dispersal Link (EDL)," it said.
The research house said it had previously factored in RM1.2bil of compensation for the EDL into its sum-of-parts valuations. However, given the higher sum of RM1.3bil announced by the government, it has raised its valuations and fair value on MRCB accordingly to 82 sen.
To recap, MRCB-George Kent Sdn Bhd has accepted the LRT3 contract for a revised sum while the government has allocated RM1.3bil as full compensation to MRCB for the abolishment of toll collection for the EDL.
The contract received by the MRCB-George Kent JV was valued at RM11.86bil for civil works, excluding land acquisitions, interest during construction and others.
According to AmInvestment, the figure is consistent with the RM16.6bil figure allocated by the government for the entire LRT3 project.
Moving forward, it said MRCB's outlook remains stable due to its strong property unbilled sales of RM1.6bil, robust construction order book of RM4.8bil and outstanding LRT jobs of RM11.86bil
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