UOB Kay Hian maintains Buy on MRCB, RNAV target price RM3.02.

KUALA LUMPUR: UOB Kay Hian Malaysia Research is maintaining a Buy call on MALAYSIAN RESOURCES CORP []oration Bhd (MRCB) and a revised net asset value (RNAV) based target price of RM3.02.

It said on Wednesday, July 6 the catalyst would be the potential to co-develop the 24-acre site in Penang Sentral and a few parcels of the 2,400-acre Sg Buloh Land, more land acquisitions in Klang Valley and “River of Life” project worth RM3 billion for Phase One.

On Tuesday, [You must be registered and logged in to see this link.] reported MRCB’s subsidiary will undertake a RM128.7 million contract to upgrade Little India in Brickfields and build government quarters.

MRCB’s 70% owned Country Annexe Sdn Bhd had on Tuesday, July 5 signed a privatisation agreement with the government and Syarikat Tanah dan Harta Sdn Bhd (Hartanah).

The agreement will see Country Annexe upgrading and beautifying Jalan Tun Sambanthan, Brickfields. It will also develop the Pines Bazaar – a three-storey building with office space, 28 stalls and 140 car park bays. It will also build 212 government Class F quarters near Jalan Ang Seng to replace the government quarters at Jalan Rozario, Kuala Lumpur.

In return, Country Annexe will receive two pieces of land at the intersection of Lorong Chan Ah Tong and Jalan Tun Sambanthan, measuring 14,297 sq metres and 5,642.71 sq metres.

Country Annexe is a 70:30 special purpose vehicle between MRCB and DMIA Sdn Berhad to construct the projects in return for the exchange land and to undertake the development.

UOB Kay Hian said that on June 16, 2010, the government awarded MRCB the contract to jointly construct Project 1 with DMIA Sdn Bhd on a Design, Build, Finance and Transfer basis.

On Oct 26, 2010, Project 1 was completed at a cost of RM36.6m and the Certificate of Practical Completion was issued.

To support the government’s initiatives for Greater Kuala Lumpur, Project 1 was subsequently expanded to cover Project 2 and Project 3.

“MRCB will be entitled to take possession of the Exchange Land that is valued at approximately RM601 psf, deemed as a fair price in Brickfields. Consequently, MRCB will have the opportunity to develop the exchange land into a mixed property development with a potential GDV of about RM1 billion. At this juncture, we expect no impact on FY11’s earnings,” it said.