KUALA LUMPUR: TRC Synergy Bhd's unsuccessful bids for the Kuching Urban Transportation System (KUTS) will reduce its current outstanding tenders to an estimated RM3.8 billion.
Hong Leong Investment Bank Bhd (HLIB) said TRC had major tenders for Mass Rapid Transit 3 CMC301 package and two packages for KUTS with an estimated value of RM3 billion and RM1.2 billion respectively.
"Bids put in for the KUTS project are for Package 1 (Blue Line) from Rembus to Stutong and Rembus depot.
"We gather that post-meeting, TRC has lost out on both KUTS bids. This would reduce TRC's current outstanding tenders to an estimated RM3.8 billion.
"Outside of MRT3, remaining tenders of RM700 million are likely to be road projects in East Malaysia. The company is also qualified to tender for flood mitigation jobs announced in Budget 2024," it noted.
It added the company's unbilled orderbook stands at RM400 million translating to a thin 0.7 times cover.
This mostly comprises its Putrajaya 8MD3 project, mint modernisation project and remainder unrecognised portion from LRT3 and PBH Sarawak projects.
"Finalisation of accounts in financial year 2024 (FY24) could still deliver reasonable margins though E&C revenue is expected to come down," it said.
Meanwhile, TRC is also expected to see partial reinstatement of the reduced value in its contract for LRT 3.
Some previously cancelled scopes of the LRT 3 was reinstated in 2024 Budget.
The reinstated value of RM4.7 billion is inclusive of construction of five new stations, acquisition of three sets of three-car trains, upgrading of the train depot, project management expenses, legal fees, land acquisition costs, insurance premiums and fees due to project delays.
"During the LRT 3 downsizing, TRC's depot contract was reduced from RM760.6 million to RM536.8 million. We reckon there is a possibility of partial reinstatement of this reduced value unless the turnkey decides to go with a different contractor," it added.
HLIB noted TRC's property segment could stay soft until Phase 2 Ara is launched in 1Q25 while its hotel segment is expected to contribute a marginal bottom line next year.
The firm maintained its "Hold" call on the stock with an unchanged target price of 38 sen.