The company’s order book stood at RM1.1bil as of the end of the second quarter of this year.
PETALING JAYA: RHB Research is forecasting construction and property development company MGB Bhd
’s earnings to increase at a compounded annual growth rate (CAGR) of 7% over the next three years.
The research house said CAGR earnings from this financial year (FY25) to FY27 would be backed by steady progress of construction of remaining Rumah Selangorku Idaman (Idaman) projects, as well as sales of other affordable housing projects in the Klang Valley with a combined gross development value (GDV) of more than RM1bil.
The research house, which is maintaining its “buy” call on MGB, said the latest contract win in Iskandar Puteri, Johor, for a RM186mil high-rise residential job indicates that the group is able to expand beyond Pahang and the Klang Valley.
“The presence of the Johor-Singapore Special Economic Zone will likely necessitate the demand for residential units in Johor for MGB to leverage,” the research house noted.
The company’s order book stood at RM1.1bil as of the end of the second quarter of this year versus RM1.2bil as of the first quarter, with RM380mil in new jobs secured in FY25, compared with the research house’s forecast of RM500mil.
“We lower our FY25 to FY27 earnings estimates by 11%, 13%, and 7%, respectively, as we factor in slower progress and lower margin assumptions for the company’s construction projects, in addition to toning down our sales forecast for its property arm.
Post adjustment, we arrive at our new sum-of-parts-derived target price of RM0.87, from RM1.02,” the research house added.
With MGB’s pipeline of new property projects, including affordable housing, providing commendable earnings visibility with cumulative GDV of more than RM1bil, the research house views the company’s valuation to be undemanding as its FY26 forecast price-earnings multiple of five times is minus one standard deviation below its five-year mean.
The research house said a major catalyst for MGB would be a faster-than-expected development for the Kertih Terengganu Industrial Park, which has an estimated GDV of RM747mil.
