KUALA LUMPUR, Aug 27 — Malaysian Resources Corporation Bhd’s (MRCB) shares were actively traded today after the company posted disappointing second quarter financial results.
At 11.30am, MRCB shares slipped half-a-sen to 73.5 sen with 2.02 million shares changing hands.
Affin Hwang Investment Bank in a research note today said MRCB reported a surprise core net loss of RM44 million in the second quarter due to losses in its construction division and slow progress billings and sales in its property arm.
“But an exceptional gain of RM55 million from the disposal of its 30 per cent stake in St Regis Hotel recognised in the second quarter lifted its net profit to RM15 million for the six-month financial year 2019 period.
“We cut our core 2019-2021 earnings per share forecasts by 61-66 per cent to reflect lower construction and property earnings,” it said.
RHB Investment Bank Bhd in another note said MRCB could see a stronger contribution from the property arm in the second half of this year as unbilled sales currently stand at RM1.76 billion, comprising mainly residential projects.
“In particular, MRCB anticipates more meaningful contributions from Sentral Suites, that has a gross development value (GDV) of RM1.5 billion and take-up rate of 85 per cent, and has chalked up unbilled sales totalling RM1.1 billion (57 per cent of total unbilled sales).
“Additionally, it said higher property revenue is expected from Tria Residences @ 9 Seputeh in Kuala Lumpur and 1060 Carnegie in Melbourne,” it said.
It added that year-to-date, MRCB has secured new property sales of RM244 million and is planning to launch three new projects namely Alstonia in Shah Alam (GDV: RM250 million), a commercial project at PJ Sentral (GDV: RM500 milion) and Kwasa Central Block D1 (still at planning stage).
Kenanga Investment Bank in a separate note said it has maintained MRCB’s sales target of RM524.8 million-RM550 million for financial year 2019-2020 due to the company’s on-going efforts to promote their projects to overseas markets, especially Hong Kong.
“Its unbilled sales will provide the group three to four years of earnings visibility,” it said.
Nevertheless, the investment bank has cut MRCB’s financial year 2019 earnings estimates by 95 per cent as it further lowered its margin assumptions for MRCB development division due to timing issues and re-timed some of the billings progress for both of the company’s construction and property development divisions.
However, Kenanga said no change was made to financial year 2020 earnings estimates as it expects progress to pick up pace for both the construction and property development divisions.
Affin Hwang has reiterated a “Hold” call on MRCB but lowered the target price to 74 sen from 90 sen.
RHB Investment has maintained a “Buy” call on MRCB but revised downwards the sum-of-parts (SOP) target price to 97 sen from RM1.10.
Kenanga has maintained an “Underperform” recommendation on MRCB with a lower SOP target price of 70 sen from 75 sen. — Bernama