RHB Research has still maintained a “buy” with MGB Bhd with new SOP derived MYR0.99 TP from MYR1.03, 36% upside and c.3.1% FY22F yield.
It said that it has lowered its target construction FY22 P/E to 13x from 13.5x, at +0.25 SD from KLCON’s 5-year average forward P/E – we deem this fair, given its robust earnings growth potential.
It said that MGB is trading at an attractive 6.5x FY22F P/E, which is nearly -2.0SD from its 5-year mean.
“Overall, its MYR1.88billion outstanding orderbook and property development GDV of MYR1.47billion should provide earnings visibility over the next three years.
Further support for its construction orderbook will come once the billings for the Kertih Bio-Polymer Park project in Terengganu kicks in. We have not imputed any contribution from the project, amid the lack of details,” it said.
RHB said that it still favour MGB’s outlook and growth trajectory as the group should continue to benefit from economies of scale at its industrialised building system plant, backed by construction orders from LBS Bina (LBS MK, BUY, TP: MYR0.63) and its Rumah Selangorku Idaman (Idaman) projects.
The research house said that the price tag for the Idaman projects – c.MYR250,000 per fully furnished unit – is indeed affordable.
“ Based on our computation using the Median Multiple Income technique, which is 3x the annual median household income , the price of an affordable house in Selangor is c.MYR262,800.
“Therefore, it is no surprise that all 1,312 housing units of the Idaman BSP project launched in October last year, are fully booked,” it said
