PETALING JAYA: Potential contract wins from the upcoming Mass Rapid Transit 3 (MRT3) project and the commencement of phase 2 of the Ara Sentral project are expected to be TRC Synergy Bhd’s main growth catalysts in the quarters ahead, says TA Research.
The research house said the construction, civil engineering and property development company did not secure any substantial jobs in 2022 as it was not aggressively bidding due to labour shortage and rising material costs.
“Currently, the group is eyeing to win a jackpot from the MRT3 project. TRC has bid RM3.1bil for work package CMC301, which is mainly involved in designing, constructing and completing a viaduct guideway, elevated stations, depot and other associated works from Pandan to Jalan Cheras in Kuala Lumpur,” said TA Research in a report yesterday.
TRC’s track record in railway and related works are expected to boost the group’s chances in securing the MRT3 contract. The group has a good chance to become the work package contractor even if it fails to win the bid to be the main civil contractor, added the research house.
Moreover, the group will proceed with phase 2 of the Ara Sentral project in Ara Damansara, Selangor which has a gross development value of RM500mil.
“Consisting of retail units and three blocks of apartments, TRC is targeting to launch the development next year,” said TA Research.
While the rising interest rate environment is expected to cause the group’s property business in Australia to remain lacklustre, the group’s hotel business in Australia is on track to recovery.
“The hotel’s occupancy and average daily rate have started to improve following the re-opening of the international border,” said TA Research.
Meanwhile, the research house stated TRC has won the arbitration proceedings against Brunei Economic Development Board (BEDB), where the latter is required to pay B$18.7mil (RM61.8mil) to TRC.
“After including the interest and legal fees, the final settlement amount was around RM70.0mil.
According to management, BEDB had recently made the payment to the group. Following the payment, the net cash of TRC is estimated to improve from RM115.4mil (24 sen per share) as of the fourth quarter of financial year 2022 to RM185.4mil (38.5 sen per share),” said the research house.
TA Research maintained a “buy” call for TRC with a target price of 43 sen per share.