MRCB registered a normalised PATAMI of RM13 million in 4QFY22, which came in lower by -82.7%yoy, mainly due to weaker performance from the property development segment. For the cumulative FY22, the group’s normalised PATAMI quadrupled to RM64.8m, which came in below expectations said MIDF, making up 85.8% of our full year estimates but was within consensus estimates.
Revenue from the division for FY22 rose 2.5 times to RM2.23b and returned to the black with a PBT of RM69.9m after two years of losses. This was largely due to the full-year consolidation of the LRT3 project earnings from Setia Utama LRT3 Sdn Bhd (SULSB), which it fully acquired in 2021. The physical construction progress is currently at 81% and financial progress at 75%. Other contributing projects include package CA2 of the Sungai Besi – Ulu Kelang Elevated Expressway (SUKE) and PR1MA Brickfields. The property development and investment division recorded a revenue of RM914.6m for the financial year, which was a +83.6%yoy increase. This led to a stronger PBT, growing +15.2%yoy to RM176.7m, attributable to the normalisation of operations and improvement in property sales and construction progress and a strong recovery in sales of completed unsold inventory. MRCB sold RM487.9m of properties in FY22 and aims to replicate this feat in FY23.
The group’s target this year is still to enhance its cash flow through the monetisation of its RM227m of unsold completed inventory. Resilient order book. MRCB’s external construction order book stood at RM26.3b as of Dec-22, made up mainly of transit-oriented development (TOD) and infrastructure projects. The unbilled portion is RM17.4b. The ongoing LRT3 project is expected to be among the main earnings driver for the group over the next two financial years, with 25% yet to be recognised. The Shah Alam Stadium rebuilding/refurbishment project has yet to be included as the scope of work and amount has yet to be finalised by the Selangor state government. Management expects the project to kick off this year, though it is unable to provide a more accurate timeline. It expects the project size to be north of RM1b.
MRCB is also diversifying away from being too concentrated in Malaysia and aims to look for more opportunities in Australia, besides identifying and venturing into new markets. It is planning to launch VISTA, a 51-storey residential high-rise in Gold Coast this year, which has a GDV of AUD391m (RM1.2b). The group also aims to launch The Symphony Centre in Auckland by 2024, a 21-storey building comprising luxury apartments, retail, and commercial space with a GDV of NZD452m (RM1.3b).
MIDF has updated its FY23E and FY24F figures to include the expected fully consolidated amount from SULSB. It is also revising the TP lower to RM0.40 (from RM0.44), which was derived by pegging the group’s FY23 EPS of 1.5 to an updated target PER of 26.4x, which is -0.5 SD below its five-year mean.
The house remains cautiously optimistic about the construction sector as the government relook at its infrastructure project rollouts, resulting in delays, such as the MRT3. MRCB is among the contenders for all three main construction packages and also the systems turnkey contract for the mega rail project.
