AmWatch - MRCB : Continues the good work BUY, 20 May 2014

STOCK FOCUS OF THE DAY

MRCB : Continues the good work             BUY

Maintain our BUY call on MRCB with an unchanged fair value of RM2.20/share - a 20% discount to its RNAV. MRCB reported 1QFY14 core net profit of RM12mil (4Q13: core net loss of RM3mil). MRCB continues to make good progress with its quarterly earnings momentum. The construction division continues to improve, chalking up an EBIT of RM5mil with no major provisions during the quarter. We continue to like MRCB as a deep-value restructuring play as the group morphs into a property-centric firm with an improving balance sheet structure. In April, MRCB signed a conditional sale & purchase agreement to dispose Platinum Sentral to Quill Capita Trust (QCT) for RM750mil. Several other possible catalysts in the works in the coming months include:- (i) ongoing negotiations on the status of its Eastern Dispersal Link (EDL) highway in Johor; (ii) a positive resolution for the PJ Sentral Garden City project; (iii) Penang Sentral project in Butterworth, which may take off by 4Q14 as per local reports; and (iv) Phase 1 of KWASA Damansara (outcome of bids could be known by the end of the month).

Others :

Banking Sector : Upturn in foreign shareholding for selected banking stocks        NEUTRAL

NEWS HIGHLIGHTS

Malaysian Airline System : Shares at record low on concern about future amid bankruptcy issues

Felda Global Ventures Holdings : Plants seeds for RM100b revenue

Malaysia Marine and Heavy Engineering Holdings : Bidding for RM5b jobs locally, overseas

DISCLAIMER:

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