Thursday, February 10, 2011

HDBSVR raises MRCB TP to RM3.15

KUALA LUMPUR: Hwang DBS Vickers Research raised the target price for MALAYSIAN RESOURCES CORP [] Bhd (MRCB) to RM3.15 after its earnings were away above its and consensus expectations.

'BUY, raised TP of RM3.15. We continue to like MRCB as a strong 10MP and election proxy, and raised our TP to reflect the higher earnings. The strong 4Q10 result shows earnings delivery is improving and execution risk is well contained,' it said on Thursday, Feb 10.

HDBSVR said MRCB's 4Q10 net profit of RM42 million (up 2.8 times on-quarter; and up 3.3 times on-year) takes FY10 net profit to RM67 million, 'way above our and consensus expectations'.

This was largely due to a turnaround in CONSTRUCTION [] profits, which swung from a RM3 million loss in 3Q10 to RM39 million EBIT in 4Q10, as well as strong property billings largely from on-going works at Lot G.

HDBSVR raised FY11-FY12 EPS by 3%-12% after imputing larger new order wins of RM700 million to RM800 million versus RM600 million previously, while also taking into account timing of recognition of existing contracts which are largely on track.

'There is room to raise our forecasts further as we had not included some key projects such as Penang Sentral (RM2 billion GDV), Batu Feringghi (RM184 million GDV) and Kia Peng Condo (RM260 million GDV), and our assumed margins for both construction and property are conservative,' it said.

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