KUALA LUMPUR: The initiation of Phases 1A and 1B within the RM11 billion Bukit Jalil Sentral (BJS) project anticipated in the fourth quarter of this year is poised to ensure continued job stability for Malaysia Resources Corp Bhd (MRCB).
Valued at RM900 million, these phases will represent a substantial portion of MRCB's ongoing projects.
According to RHB Research, MRCB's active construction order book closed at RM15.7 billion by the end of fiscal year 2023 (FY23), providing a robust earnings outlook spanning over five years.
However, the research house has revised downward MRCB's earnings forecasts for financial years (FY) 2024–2025 by 12 to 13 percent, citing adjusted billing assumptions for construction projects and introducing a FY2026 bottomline with a targeted job replenishment of RM1 billion.
As a result, RHB has established a new target price of 70 sen, incorporating environmental, social, and governance factors, reflecting a 3.0 rating.
The research highlighted MRCB's tenderbook of RM30 billion, which includes bids for three Mass Rapid Transit 3 packages (RM25 billion to RM29 billion), a power plant in Kulim (RM300 million), and Johor's Iskandar Malaysia Bus Rapid Transit (approximately RM400 million).
However, the tenderbook excludes notable projects such as the redevelopment of the Shah Alam Stadium, with demolition expected to commence in the first half of 2024, and Kuala Lumpur Sentral.
RHB identified MRCB's potential venture into Sabah through the Pan Borneo Highway Sabah Phase 1B project as a catalyst for near-term reassessment.
Maintaining a buy call, RHB has adjusted the target price to 70 sen from 74 sen.
MRCB reported a core net loss of RM66.2 million in FY23, excluding one-off gains from property sales, falling short of both company and market earnings estimates of RM4 million and RM39 million, respectively.
RHB attributed this deviation to overly optimistic billing assumptions.
On a positive note, MRCB's improved net gearing ratio of 0.18 times in FY23 compared to 0.34 times in FY22 positions the group favorably for potential major infrastructure projects.
This sets the stage for significant growth in its order book in the future, according to RHB.