Hong Leong Investment Bank Bhd (HLIB) and CIMB Investment Bank Bhd (CIMB Securities) have maintained their BUY calls on Malaysian Resources Corporation Bhd (MRCB), with both placing a target price of RM0.50 on the stock, as the group secures a RM3 billion Penang Mutiara Line LRT systems contract while agreeing to sell 48.8 acres of Cyberjaya land for RM419 million.
CIMB Securities said the LRT systems turnkey contract, awarded by MRT Corp to the MRCB-Theta Edge joint venture, gives MRCB an effective share of about RM2.7 billion under the 90:10 arrangement. The 68.8-month contract covers trains, signalling, track, power supply, telecommunications and fare collection systems.
The contract is expected to push MRCB’s new order book well beyond its FY26 target of at least RM2 billion. CIMB raised its core FY26 to FY28 earnings forecasts by 3% to 12%, lifting its target price from RM0.48 to RM0.50.
Separately, HLIB said MRCB’s conditional sale of seven Cyberjaya land parcels to Digital Cosmos Malaysia could generate a net disposal gain of RM81 million. Of the RM419 million proceeds, RM350 million is expected to repay Sukuk due within 12 months, reducing net gearing to 0.31x from 0.41x.
HLIB estimated the repayment could save about RM17.5 million in annual interest costs, although it cautioned that the benefit may not be sustained as MRCB faces substantial funding requirements for its RM8 billion order book and RM2.1 billion Bukit Jalil data centre project.
HLIB retained its RM0.50 target price, while CIMB sees further potential from a possible Package CMC2 award for the Penang LRT later this year.
As of 11.28 am, the stock price is flat at RM0.345.
