PETALING JAYA: Malaysian Resources Corp Bhd’s (MRCB) project pipeline is expected to start materialising in 2024 as the group benefits from better project pipeline visibility and value unlocking initiatives, says Hong Leong Investment Bank (HLIB) Research.
The research house said the construction and property group’s pipeline visibility is strong, anchored by projects such as the Light Rail Transit Three (LRT 3) phase two, and the redevelopment of Shah Alam Stadium and KL Sentral.
As MRCB’s pipeline is estimated to be formalised in 2024, HLIB Research noted the lowest hanging fruit could be the reinstated scopes of the LRT 3 phase two.
This was judged based on its targeted operations timeline of the second quarter of calendar year 2027 for phase two, in which the research house reckons formalisation of the enlarged scope will happen soon.
HLIB Research noted the move would add more than RM1.5bil to MRCB’s active order book of RM1.5bil, as at end-September 2023.
The Shah Alam Stadium redevelopment, worth some RM1bil, will likely be split into several phases to aid land monetisation with demolition phase expected to commence in 2024 and reach completion by mid-2025.
HLIB Research noted other higher value phases will commence post-demolition, which is expected by the second half of 2025.
“The progress timeline of the project is rather fluid and could remain so considering 100% land consideration.
“The commercial viability of proposed land parcels will have to be considered prior to finalisation,” the research house added.
On a brighter note, MRCB has continued to benefit from its track record with KL Sentral, where it was the transit-oriented development or TOD developer of the project.
HLIB Research estimates that MRCB’s appointment as the contractor for the rejuvenation of KL Sentral will be formalised by midyear and based on previous guidance, it could add about less than RM1bil to MRCB’s order book.
Due to KL Sentral’s overcapacity situation and need for expansion, MRCB was chosen as the contractor for its revitalisation last year. Development rights over KL Sentral’s airspace will be provided to MRCB as part of this proposal.
Meanwhile, HLIB Research reckons the Berjaya HSR Consortium, comprising MRCB, Berjaya Rail, IJM Corp and Keretapi Tanah Melayu Bhd, is well balanced with complementary expertise.
However, the research house is in view that a few issues must be resolved before it can proceed to the implementation stage.
The consortium had submitted its concept proposal for the Kuala Lumpur-Singapore High Speed Rail during the request for information stage that had passed recently.
HLIB Research stated that in order to augment fare revenue, the consortium will need to work out an equity participation structure in addition to various non-fare revenue streams including property and media rights.
As for MRCB’s property projects, launches worth RM4bil are slated for financial year 2024, with sales target standing at RM800mil, driven mainly by domestic projects. HLIB Research maintained a “buy” call on MRCB with a higher sum-of-part driven target price of 70 sen per share, after increasing construction target price earnings multiple to 16 times.
