KUALA LUMPUR: RHB Research maintained its buy call on Malaysian Resources Corp Bhd on news that its joint venture with Gamuda Bhd
had been appointed the Kuala Lumpur-Singapore High Speed Rail project delivery partner for the northern portion of the project.
AS a PDP, it would be responsible for designing and delivering the civil works for the HSR project at an agreed cost and schedule, involving the planning, construction, testing and commissioning of the railway.
The research firm said the PDP fees would likely add six sen to its target price, although it maintains target price at RM1.34 for now.
RHB Research noted that the terms of the PDP Package 1 agreement will be negotiated over the next three weeks with an award given upon mutual agreement.
"Based on the project’s environmental impact assessment (EIA), the northern portion makes up about 45% of the railway alignment. Assuming a total infrastructure cost of MYR35bn and a construction period of eight years, the PDP fees would add 6 sen to MRCB’s TP, based on a 5% PDP fee and 9% discount rate.
"We keep our FY18-20 earnings forecasts unchanged, as the contribution of the PDP fees would likely be minimal at the initial phase of the project.
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