KUALA LUMPUR: Aminvestment Bank Research is maintaining its Buy call on Malaysian Resources Corporation Bhd
(MRCB) with an unchanged fair value of RM1.89, based on a 10% discount to its realised net asset value (RNAV).
MRCB’s 51%-owned subsidiary Metro Spectacular Sdn Bhd had entered into a sale and purchase agreement with the mayor of Kuala Lumpur to buy three parcels of land totaling 40,720.5 sq metres, all in Kuala Lumpur, for RM335.5mil.
The land is around Jalan Putra, Kuala Lumpur, about 4km to the north of Kuala Lumpur city centre. It is bound by main access roads, such as Jalan Putra, Jalan Tun Ismail, Jalan Tun Razak, and Jalan Kuching, with access from multiple directions.
AmInvest Research said on Friday it did not make any changes to its earnings forecasts, as it expects the contribution from the potential development on the land to be acquired to only be realised in the next few years.
“We are positive on the proposed acquisition. It would increase MRCB’s landbank, allowing it to sustain its property development business moving forward.
“We are encouraged by the strategic location of the land which lies within a short distance from the city centre, with connectivity to public transport infrastructure.
“We believe the land has a high prospect of being developed into successful development, given the scarcity of prime land in Kuala Lumpur for sizeable commercial development.
“The acquisition is expected to be completed by 4Q17. We are not concerned by the potential increase in gearing due to the loan amount of the group as we believe the gearing level of MRCB is currently at a very manageable level, which should be further improved by its upcoming rights issue,” it said.
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