PETALING JAYA: Construction group MGB Bhd
is expected to strengthen its earnings visibility in the coming years following the recent securing of additional orders for precast concrete worth 75.1 million Saudi riyals or about RM88.4mil in Saudi Arabia.
The development marks a significant step forward for MGB’s presence in the kingdom’s fast-growing precast-concrete industry.
MGB has secured these new orders under its joint-venture agreement with Sany Alameriah Industrial Co (SA), bringing the total secured precast volume to date to 102,000 cubic metres.
This represents 38% of the 270,000 cubic metre commitment under the agreement, which runs until next year.
Mercury Research said, that while contract wins for MGB have been gradual, it maintained confidence that SA “remains on track to fulfil its commitment, supported by Saudi Arabia’s strong property market outlook and supportive government housing policies”.
The research house added the contract win is expected to “enhance MGB’s earnings visibility this year and beyond”.
MGB secured the latest purchase orders through its wholly owned subsidiary, MGB International For Industry (MGBI).
The contract relates to an existing agreement between SA and Shapoorji Pallonji Mideast LLC for the supply and installation of precast concrete in the Roshn Alarous development, a large residential project in northern Jeddah, Saudi Arabia.
Under the contract, MGBI will supply and install approximately 42,000 cubic metres of precast concrete to support the construction of 326 residential units within Al Arous-Phase 1 (Zones B & C), alongside related public amenities.
The scope of work will include design and build, engineering, fabrication, rectification, and installation.
Mercury Research emphasised that despite the gradual pace of contract wins, it “believe SA remains on track to secure the remaining precast concrete orders, underpinned by a robust property market and government policies aimed at promoting home ownership.”
The research house said it expects the growing adoption of precast technology in Saudi Arabia’s large housing developments to present MGB with potential opportunities for recurring orders from SA and other regional developers.
Furthermore, the trend is likely to further enhance MGB’s precast concrete order book moving forward.
“Given the increasing adoption of precast technology in Saudi Arabia’s large housing projects, we see potential for recurring contracts from SA and other regional developers which could further enhance MGB’s order book for precast concrete,” the research house said.
Mercury Research maintained its positive outlook on MGB, reiterating its “buy” call with an unchanged target price of RM1.18.
