RHB upgrades MRCB to 'buy'

KUALA LUMPUR: RHB has upgraded Malaysian Resources Corp Bhd (MRCB) to 'buy' from 'neutral', given its restructuring drive, prime landbank and for being a strong contender for 'Project MX-1' of Kwasa Damansara.
RHB noted that MRCB will raise a total of RM759 million cash proceeds from three key disposals, cutting its net debt and gearing to MYR2.1 billion and 1.3 times respectively.

"Previously, net debt and gearing stood at RM2.9 billion and 1.7 times respectively. More importantly, the speed and decisiveness of MRCB's new management in effecting these transactions gives us the comfort that it has a strong sense of urgency to lift the company out of its doldrums."

RHB said MRCB is a strong contender for 'Project MX-1' of Kwasa Damansara.

"Given that two MRT stations will form an integral part to the first parcel known as 'Project MX-1' to be rolled out from Kwasa Damansara, we believe MRCB's track record in KL Sentral, a world-class transit-oriented development (TRO), will put it ahead of its competitors."

RHB said the investing fraternity is warming up to MRCB's new management, on the back of the relentless efforts by key members to accommodate meetings with analysts and fund managers to exchange ideas.

"We have raised MRCB's financial year 2014 core net profit forecasts by 10 per cent, largely to factor in interest savings arising from disposal proceeds.

"We also raise its fair value by 38 per cent to RM1.82 after ascribing mid-cycle valuations to MRCB's property assets from low-cycle valuations previously.

"This is in line with the recent upgrade in our weighting for the property sector to 'overweight' from 'neutral'."