THE BUZZ
StarBiz reported that MRT Corp has awarded TRC Synergy the s1 Package of the Klang Valley My Rapid Transit (KV MRT) Sungai Buloh-Kajang (SBK) line for a contract sum of RM284m. The package comprises the construction of three elevated MRT stations in Sungai Buloh, Kampung Baru Sungai Buloh and Kota Damansara.
OUR TAKE
Positive surprise. The announcement was a positive surprise as we had previously assumed a FY12 orderbook replenishment of RM700m for TRC. Including this job, the company has secured RM973m worth of new jobs YTD, taking its outstanding orderbook to over RM2bn. This alone should last the company well into 2H14. Note that this contract is the corresponding station package for the v1 viaduct package, which was earlier won by Syarikat Muhibbah Perniagaan & Pembinaan for a total sum of RM1.09bn.
2QFY12 numbers likely to disappoint. On the flip side, we continue to caution investors on a potential earnings disappointment on TRC’s upcoming 2QFY12 results release. As previously highlighted, this is mainly due to the slower-than-expected progress of its LRT extension project owing to the delay in approvals from authorities. Having said that, TRC’s earnings are expected to normalize in 2HFY12 given that all the required approvals for works to commence had been secured in April.
TRADING BUY. We maintain our TRADING BUY call on TRC with FV unchanged at RM0.79, pending the release of its 2QFY12 results on 30 Aug. Although a downgrade to FY12’s forecast is likely, we remain upbeat on TRC’s prospects over the medium term as construction progress on its LRT extension project has since picked up and numbers should normalize come 2HFY12’s results release.
Source: OSK
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