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MIDF maintains earnings forecast for MRCB despite winning RM32.5m job

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MIDF maintains earnings forecast for MRCB despite winning RM32.5m job Empty MIDF maintains earnings forecast for MRCB despite winning RM32.5m job

Post by Cals Thu 24 Oct 2013, 13:23

MIDF maintains earnings forecast for MRCB despite winning RM32.5m job
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com   
Thursday, 24 October 2013 11:42
KUALA LUMPUR (Oct 24): MIDF Research said it maintained its earnings forecast for Malaysian Resources Corporation Bhd despite the property and infrastructure developer announced yesterday it had via its unit secured an overhead transmission line job worth RM32.5 million.
In a note today, the research house said this latest RM32.5 million job falls within its order book replenishment targets for current year and next, hence no changes to forecast earnings were made.
MIDF research analysts Syed Muhammed Kifni and Hafiz Hassan said they maintained their ‘neutral’ call on MRCB stock with target price of RM1.64 based on its FY14 sum of parts valuation.
“We expect the contract will add about RM1.56 million and RM11.7 million to FY13 and FY14 revenues respectively,” they said.
“While the earnings impact from this job is relatively small, nevertheless we believe the company is in good stead to secure more transmission line projects going forward.”
The pair said assuming a pretax margin of 9%, they estimated contributions of RM0.14 million to this year’s and RM1.05 million towards next year’s bottomlines.
Additionally, the analysts noted MRCB preferred the overhead transmission line to the submarine transmission for this project due to environmental concern, adding the cost is cheaper.
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