Friday, September 6, 2013

MRCB - bright prospect

Its prospects are bright after the Nusa Gapurna acquisition and its latest RM130 million river rehabilitation contract.

The latest deal should address investors' concerns over MRCB's depleting construction order book, which was RM1 billion before the Nusa Gapurna acquisition.

In late Aug 2013, MRCB won a contract worth RM130 million from the Irrigation and Drainage Department to execute Phase 3 of the Pahang river rehabilitation project, which is targeted to be completed in September 2015.

Its outstanding infrastructure and environmental segment is believed to have dipped below RM80 million.

Investors' interest in MRCB may be sluggish due to slow project replenishment, depleting property portfolio, high maintenance and low traffic growth for Eastern Dispersal Link. However, a better prospect for MRCB after the Nusa Gapurna acquisition.

MRCB's earnings will improve from 2015 onwards as Nusa Gapurna has given a three-year profit-after-tax guarantee of RM50 million.

The company's land bank will increase from 20ha to 33.2ha, with total gross development value of the Nusa Gapurna land estimated at RM5.7 billion. The RM3.4 billion Nusa Gapurna's subsidiary, GHC Sdn Bhd's outstanding orderbook, will boost MRCB's contract flow.

Datuk Mohamed Salim Fateh Din as MRCB managing director emerged as the second largest shareholder in MRCB after Employees Provident Fund, with 12.5 per cent stake.

His hallmark green projects include the 348 Sentral at KL Sentral and the ongoing PJ Sentral Garden City, both hailed as industry benchmarks geared towards the highest standard of the US-based Leadership in Energy and Environmental Design as well as Malaysia's Green Building Index standard for sustainability.

Earlier in his pioneering career, MRCB said Salim had created the "Super Store Petrol Station" concept for leading oil companies, namely Shell, Esso, BP and Caltex. He was responsible for designing the latest distribution centres for retailer Giant, by modernising and improving its food-processing systems while reducing its logistic costs and delivery turnaround time.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.