Monday, October 3, 2011

MRCB dips midday, weak market sentiment weighs

KUALA LUMPUR: Shares of MALAYSIAN RESOURCES CORP []oration Bhd (MRCB) shed two sen to RM1.66 at midday on Monday, Oct 3 due to the current weak market sentiment while analysts maintained a Buy call but lower target price of RM2.57ts, .

At 12.30pm, it was down two sen to RM1.66. There were 2.66 million shares done at prices ranging from RM1.64 to RM1.67.

The FBM KLCI skidded 28.58 points to 1,358.55. Turnover was 311.32 million shares valued at RM468.34 million. Declining stocks hammered gainers 515 to 102 while 153 counters were unchanged.

MRCB had last Friday entered into a junior sukuk transfer agreement with the National Agricultural Cooperative Federation for RM230 million cash.

To recap, MRCB had subscribed for the entire junior sukuk issued by its unit MRCB Southern Link Bhd which was raised together with RM845 million nominal value of senior sukuk with a transferable loan of RM220 million to finance the CONSTRUCTION [] of Eastern Dispersal Link (EDL).

UOB Kay Hian Malaysia Research expected MRCB to record a gain of about RM34.2 million (about 2.0 sen to earnings per share) from the disposal in FY11 and it regarded this as a one-off item.

It said this disposal allowed MRCB to unlock its investment in cash while still maintaining its equity shareholding in EDL at 100%.

'After the recent sell-down in the general market, we believe MRCB at RM1.68 is attractive given its high beta nature and has potential for a stronger rebound given that the upcoming catalysts are intact such as the award of River of Life phase One worth RM1 billion and potentially playing 'double roles' as both the Master Planner and project developer for the 2,300 acres of RRI land in Sungai Buloh.

'Maintain BUY and but downgrade target price to RM2.57 based on 15% discount to RNAV (from RM3.02),' it said.

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