PETALING JAYA: Malaysian Resources Corp Bhd’s (MRCB) growth prospects will continue to be supported by its unbilled sales and new launches from its property arm, and long-term construction order book.
RHB Research said MRCB’s core earnings for the nine-month period for the financial year 2023 (9M23) of RM20.8mil missed expectations at 44% of both its and the street’s full-year projections.
This was partly due to a higher-than-expected tax rate due to a financial year 2022 (FY22) tax under-provision, which was known in the third quarter of 2023 (3Q23).
“While we project a 13% year-on-year (y-o-y) earnings drop for FY23, MRCB estimates a three-year earnings compound annual growth rate of 15%, supported by its strong orderbook-to-revenue cover ratio of more than 10 times and landbank of 1,153 acres (gross development value or GDV of RM33bil),” the research house said in a report.
RHB Research’s outstanding construction orderbook was at RM16bil as at the end of 9M23. This encompasses the RM11bil Bukit Jalil Sentral project – and provides more than five years of earnings visibility.
Meanwhile, MRCB’s property arm is expected to be driven by planned FY24 launches worth RM1.7bil and RM2.3bil in New Zealand and Malaysia. RHB Research said the group is likely to record better sales momentum going forward with RM513mil of property sales achieved in 10M23 (surpassing FY23’s RM500mil target).
RHB Research maintained a “buy” call on MRCB with a target price of RM0.52. The research house cut its FY23 to FY25 earnings by 14.8%, 12%, and 6.8%, respectively.
Meanwhile, Hong Leong Investment Bank (HLIB) Research which also maintained a “buy” call on MRCB with a target price of RM0.54, said the main upside catalysts for the group are contract wins and asset monetisation
HLIB Research expects the revived scopes of the light rail transit three or LRT3 (Phase 2) to be finalised in early 2024 and could add more than RM1.5bil to MRCB’s active orderbook.
On the other hand, MIDF Research expects the remaining progress for the systems and civil works of the LRT3, which has achieved completions of 8% and 91% respectively to spur MRCB’s performance in the near term. It has maintained a “neutral” call with a target price of RM0.42 on MRCB.
