Malaysian Resources Corporation Bhd (MRCB) emerged as one of the actively traded stocks on Bursa Malaysia in the early session on Thursday following the announcement to redevelop Kuala Lumpur Sentral Station.
At 10.41 am, MRCB’s shares increased 1.5 sen to 39 sen with 32.12 million units traded.
Yesterday, Transport Minister Anthony Loke said the Cabinet had approved in principle to redevelop the KL Sentral station on a private finance initiative (PFI) basis with MRCB, which is the developer of the entire project at a cost of more than RM1.0 billion.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) said this flagship project boasts of a total gross development value (GDV) of RM18.0 billion and currently more than 200,000 commuters pass through the station daily.
At a designed daily capacity of 100,000, the station has been due for upgrades for some time.
“We believe that with five acres left from an original 60 acres of development land, this is a timely opportunity to expand MRCB’s commercial exposure in a prime and strategic location,” it said in a note.
Other transit-oriented developments (TODs) MRCB is involved in are PJ Sentral, Penang Sentral, Kwasa Sentral and Cyberjaya City Centre.
HLIB said that given the project will be done on a PFI basis, MRCB’s monetisation timeline will be a relatively long one — when residential and commercial units are developed and sold.
This will take place once the redevelopment of the station is complete.
“From what we gather, demand has been strong historically, with residential developments seeing take-up rates of 85 per cent and above,” it said.
Back-of-the-envelope calculations suggested that post disposal of Menara CelcomDigi, this project in isolation could increase net gearing from 0.27x to a still manageable 0.49x.
“Nevertheless, if MRCB undertakes this project concurrently with the Shah Alam Stadium redevelopment (over RM1 billion), this could take net gearing beyond 0.49x, by our estimates,” it said, adding that it maintained a “Hold” call on MCRB with a target price of 34 sen.
