February 25, 2010
Lower gearing allows MRCB to acquire more land
(KUALA LUMPUR) Malaysian Resources Corporation Bhd's (MRCB) lower gearing provides more room for it to acquire new land bank for future growth, says Kenanga Research.
'The successful rights issue, which raised RM514 million (S$212.7 million), lowered net gearing to 0.3 times from 1.25 times. It has also positioned the company to acquire new land bank for future growth or invest in infrastructure concessions, ' it said.
OSK Research in a separate note said that the potential acquisition of federal land could provide a further re-rating of MRCB's share price from RM1.63 per share.
OSK had previously quoted MRCB's target price at RM1.54.The research house also said it expects an overall strong performance by the company in 2010.
As for the 2009 financial results which moved MRCB back into the black, Kenanga said, it was mainly due to the continuous strong construction and property revenue and profit contribution.
MRCB posted a pre-tax profit of RM46.492 million for the year ended Dec 31, 2009 against a pre-tax loss of RM42.155 million in the previous financial year.
Revenue jumped to RM921.616 million from RM788.552 million previously.
Kenanga is maintaining MRCB's net profit forecast of RM56.6 million for its financial year ending Dec 31, 2010 and estimates the 2011 net profit to be RM80.9 million.
Martin Koh/ Sherry Tang