News MRCB
announced that its CEO, Datuk Mohamed Razeek has tendered his resignation
effective from 18th of August
2012. To recap, he was appointed as MRCB’s CEO in December 2009.
Comments We
take the news as neutral as we see that the resignation could be a prelude to
another major corporate exercise in the group.
We do not discount
the possibility that there could be another round of major corporate exercises
like mergers or takeovers in the near term. We think that
MRCB will be actively looking for the right party to contribute
major assets i.e. land banks as its KL Sentral development is maturing within
the next one to two years time.
To recap, in 2010,
the merger between MRCB and IJM Land was halted due to some disagreements between the two parties. The rumours were then
that the main disagreement was over the selection of the top level management
of the newco.
Outlook MRCB will be the best proxy for the RRI land development,
which we think will kick off in the near term, possibly early next year.
We believe that MRCB
is still actively bidding for some projects under ETP i.e. buildings and infrastructure
projects. Its current order book stands at about RM1.0b for the next 2 years.
Forecast No changes to our forecasts.
Rating Maintain
OUTPERFORM
We are maintaining
our OUTPERFORM recommendation on MMC due to the ample upside to our target
price and as the stock rides on the possibility of potential positive corporate
exercises in the near term.
Valuation No
change in our Target Price of RM2.71, which is based on SOP valuation.
Risks Delays in securing major more land banks as KL
Sentral development is maturing within the next one to two years.
Source: Kenanga
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