What’s NEXT! MRCB

MRCB

What’s NEXT! … dated Feb 2011

It is looking to expand its landbank given that it has only 12 acres left in its flagship KL Sentral development.

According to sources, MRCB is in “advanced negotiations” for a sizable parcel of land in Petaling Jaya, although details are still unknown. Indications are (that) an acquisition is likely by end-2011.

Outside the Klang Valley , the group is vying for land along the Eastern Dispersal Link (EDL) in Iskandar Malaysia , Johor, and in Terengganu. Funding is not an issue given the RM200 million balance of proceeds from the rights issue.

MRCB is also said to be eyeing another five to six acres of land near Brickfields, Kuala Lumpur , following its recent acquisition of an acre near Jalan Kia Peng at RM750 psf for a high-rise development.

It posted net profit of RM42 million on revenue of RM433 million for the quarter on stronger margins. For FY10, its earnings nearly doubled year-on-year to RM67.3 million on revenue of RM1.07 billion.

The construction player and property developer is thought to be poised to participate in the mega development of the 3,300-acre Rubber Research Institute of Malaysia land in Sungai Buloh.

It was widely regarded that MRCB, together with IJM Land Bhd, which shares a common substantial shareholder in the Employees Provident Fund (EPF), would combine forces to jointly participate in developing certain parcels of the land, which will be allocated to the EPF by the government.

The two had announced a proposed merger at the end of 2010, although the deal fell through. However, the parties have not ruled out the possibility of future collaborations.

Meanwhile, MRCB also announced that it was targeting RM1 billion in orderbook replenishment in FY11, coming from its environmental projects in Kuala Sungai Pahang and Perai, Penang, as well as civil works on the mass rapid transit (MRT) and light rail transit (LRT) lines.

Besides the LRT and MRT contracts, which most contractors are vying for, MRCB is the frontrunner for the RM300 million Penang Sentral project, for which the sweetener is the eventual development of the surrounding land.

The other project is the Klang River cleanup project - the MRCB-Ekovest JV is rumoured to be close to securing the award worth RM1 billion to RM2 billion for just the initial stage. The project to clean up and develop Klang river ( River of Life project) was estimated to be worth around RM8 billion to RM10 billion with Phase 1 estimated at RM1 billion to RM2 billion.

Its earnings surged 230% to RM41.50 million for the fourth quarter ended Dec 31, 2010 from RM12.41 million a year ago, boosted by improved profit margin and property development projects.

Revenue rose 53.7% to RM433.12 million from RM281.67 million. It proposed a dividend of 1.5 sen per share.

For the financial year ended Dec 31, 2010, its earnings jumped 94% to RM67.27 million from RM34.62 million. Revenue rose to RM1.967 billion from RM921.62 million.

Its cash and cash equivalents rose to RM487.27 million from RM232.57 million.

The commendable result for the current quarter was mainly contributed by improved profit margin coupled with advanced stage of activities of its engineering and construction ongoing works and property development projects at Kuala Lumpur Sentral.

The higher operational margin was achieved on the back of crystallization of its ongoing value engineering and efficient project supervision and cost saving initiatives.

The higher revenue was contributed mainly from its construction and engineering division with ongoing work progress reaching maturity stage at relatively higher percentage of recognition compared to previous year.

The same impact was also contributed by the group’s ongoing property development projects at Kuala Lumpur Sentral.

It posted losses of RM1.26 million in the third quarter ended Sept 30, 2010 on the back of RM5.12 million in revenue. However, its net assets per share were RM1.21. It was in deficit of RM2.94 million as at end September while its short-term borrowing totalled RM12.03 million.