KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research rates Malaysia Resources Corp Bhd (MRCB) a 'buy' with a target price of RM2.02 on plan to get full control of Penang Sentral
According to HLIB, MRCB is to acquire the remaining 51 per cent stake in Penang Sentral from Pelaburan Hartanah Berhad (PHB) for RM50.75 million. The purchase price was on the basis of future profits from the development of the Penang transport hub and mix development. The acquisition is expected to be completed by September 14.
"The Penang Sentral transportation hub was first mooted back in 2007. The development is located in Butterworth with an estimated gross development value (GDV) of RM2 billion. The first phase of the development has a GDV of RM512 million.
"We are mildly positive over the acquisition as it will allow MRCB to have full control over the execution of the development as well as full earnings recognition. Moreover, we believe that the price is fair.
"Based on Phase 1’s GDV, the development profits work out to a profit after tax margin of 19.5 per cent, which is within the range of property development profit margin of 20-25 per cent.
"We remain optimistic that the new management will be able to turnaround MRCB’s operations and positive on the de-gearing exercise. Hence, we maintain our long term 'buy' call."