MRCB - Positive Results After 'Kitchen Sink'

It threw out the kitchen sink in the third quarter ended Sept 30 and may end up in the red for the full year of 2013.

The conglomerate may be monetising some of its mature assets for a “substantial” sum to be concluded in January 2013. The disposal of GTC Global Sdn Bhd for RM45mil is considered small, there should be something more substantial going forward.

It is possible that MRCB will dispose of its non-core unit MRCB Technologies Sdn Bhd that provides information technology services and professional outsourcing. That is on top of its plans to sell its 30% stake in Duta-Ulu Kelang Expressway, which is believed to be worth RM200mil.

MRCB is also looking to monetise Platinum Sentral, an office property located within the group’s flagship KL Sentral project.

It is learnt that the group is considering several ways to unlock the value of the property to match its monetisation goals.

It was reported that the sale of Platinum Sentral would raise its realisable net asset value by 9%.

MRCB’s net gearing stood at 1.7 times while total borrowings was RM3.4bil as of September 2013.

The potential toll collection at the Johor Baru Eastern Dispersal Link Expressway could enhance its cashflow especially with the improving traffic volume.

Market observers were turning more positive on the company because it was making efforts to clean up the books by making all the provisions in the third quarter.

Due to the provisions, the company may be making losses for full financial year ending Dec 31 but it should be turning around well in 2014. MRCB reported a loss of RM122mil in the third quarter ended Sept 30, with nine-months deficit of RM111.3mil.

MRCB had guided that the company would unlock its property value by launching more projects going forward while rationalising its construction arm.

The construction firm could see earnings recovery in 2014.

Positive results will result from the kitchen sinking exercise. Observers do expect such provisions in the next quarter and in 2014 and that the provisions could be written back in the future.