An artist's impression of the multi-billion-ringgit Bandar Malaysia

KUALA LUMPUR: RHB Research Institute is upbeat on Malaysian Resources Corporation Bhd’s (MRCB) construction division as it is a potential candidate to develop Bandar Malaysia, which will be a transit oriented development project.

The research house said other than the Bandar Malaysia and the High-Speed Railway (HSR) contracts, it understands that MRCB is also actively bidding for other infrastructure and 1Malaysia Housing Programme (PR1MA) housing construction. 

“Tender book as at December 2016 is worth RM6.3bil and we believe the amount is higher now. Outlook for orderbook replenishment is fairly positive, given its solid shareholding backing and bumiputera-controlled public listed company (PLC) status,” it said.

Maintaining its buy call for MRCB, it raised its target price from the last traded price of RM1.62 to RM1.90, as it increased its construction price-to-earnings (P/E) multiple to 16 times, in line with the re-rating of the construction sector. 

It also lowered its discount to realised net asset value (RNAV) to 25% (from 30%) in view of the strong contract flows this year. 

“MRCB is a potential election play. The stock is one of our top picks in the property sector,” it said.

RHB Research said investors should continue to like MRCB given its potential involvement in the integrated transport terminal project in Bandar Malaysia. The project has been in the limelight recently. 

Given the recent news flow of China investments into the Bandar Malaysia, it believes MRCB is a potential candidate involving in the development of this transit oriented development. 

Upon official signing, MRCB would likely see a significant boost in its property portfolio and construction orderbook. Also the setting up of Kuala Lumpur Internet City (KLIC) in Bandar Malaysia should indicate that the negotiation process on the transport hub could accelerate.

MRCB, which has already signed a MOU with Wondrous Vista Development Sdn Bhd and Bandar Malaysia Sdn Bhd, is well-positioned to undertake the transport hub construction project, given its track record in building transit oriented developments.

Of the 486 acres in Bandar Malaysia, 60 acres have been earmarked for the development of the integrated transport terminal. 

“Apart from building the terminal, we believe the consortium would also develop some other commercial components on the site, similar to the KL Sentral concept. 

“The potential GDV for this 60 acres in Bandar Malaysia could be bigger than KL Sentral’s RM14bil, which occupies 72 acres of land, given that the latter started its development in early 2000 when property prices were still at low levels.

“While the construction of the high speed rail (HSR) line could be undertaken by some foreign parties, apart from the main terminal in Bandar Malaysia, MRCB is also eyeing the construction jobs of the other five HSR stations in Malaysia, and possibly some sub-packages for the track works. The construction of HSR is said to cost RM60bil, and the tender could be called in late 2017/2018,” said RHB Research.

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