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Thursday, March 6, 2008

MRCB expects job orders to hit RM9b

MALAYSIAN Resources Corp Bhd (MRCB), a construction and property company, expects orders to jump by as much as 50 per cent to RM9 billion by the end of the year, its top official said.

The combined order book of the main board company currently stands at around RM6 billion to RM7 billion.

"We're quite confident in terms of where we're going," group managing director Shahril Ridza Ridzuan said in an interview with Business Times.

The two businesses typically account for up to 85 per cent of group revenue and profit, with the balance coming from environmental activities, property assets and building services, among others.

On the property front alone, the group is planning up to RM6 billion worth of new developments. It is keen on securing more projects in the Middle East, Shahril said.

MRCB was once a cash-strapped company that has managed to successfully transform over the years. Today, it is a favourite among foreign fund managers.

The group is well known for its KL Sentral development in Kuala Lumpur, which comprises hotels, apartments, shops and the rail and bus terminals.

Shahril pointed out that MRCB has achieved solid growth in revenue and pre-tax profit over the last four years.

Net profit last year, up 21 per cent to RM40.7 million, would have been about RM28 million higher had the company not decided to take in a deferred tax liability in the fourth quarter, as well as the entire cost of a bond refinancing for its KL Sentral project, he said.

The group will start to pay dividends for the first time in its history, starting from the 2007 fiscal year.

Despite the group's rosy prospects, MRCB's share price has been falling sharply this year.

Just last year, it was one of the stock market's star performers, appreciating 145 per cent as both local and foreign funds lapped up the shares.

Shahril insisted that the company's strong fundamentals remained intact.

"I think what you're seeing now is nothing more than a fallout from redemptions in the overseas market; foreign funds having to essentially sell their profitable holdings, which means companies like ourselves, Gamuda, IJM.

"If you look at the universe of stocks that we live in, everybody has gone down in this period. So we're really no different from our market segment," he said.

Analysts agreed, pointing out that at least 60 per cent of the company's shares are typically held by funds.

They continue to like the stock, with 11 of at least 12 analysts who track the stock recommending a "Buy" on it.

"It's a stock we like for three reasons: the turnaround story and strong financials, its professional management, and the exposure it offers to government spending as a government-linked construction company," said Choo Swee Kee, chief investment officer at TA Investment Management.

The shares, which ended last year at RM2.55, peaked at RM3.04 in mid-January, then started on a downward trail that became more pronounced last month. The stock closed at RM1.84 yesterday, down seven sen.

By New Straits Times - Business Times (by Adeline Paul Raj)

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