KUALA LUMPUR (May 31): Shares in Malaysian Resources Corp Bhd (KL:MRCB) fell on Friday, and nearly wiped out their gains this month, as the latest weaker-than-expected quarterly results prompted caution among investors and analysts.
MRCB declined as much as 5% or 3.5 sen to 66 sen, its lowest since May 3. At that price, the construction and property development company was valued at RM2.95 billion on Bursa Malaysia, after more than 22.5 million shares changed hands as at 10.15am on Friday.
At least one research house has downgraded MRCB, as net profit for the first three months ended March 31, 2024 (1QFY2024) merely accounted for 5% of the consensus full-year forecast.
Hong Leong Investment Bank cut its recommendation to ‘hold’ from ‘buy’, and said that it’s “time for a rest” after the recent share rally.
Shares in MRCB have racked up some 50% gain so far this year, outperforming the broader rally of both construction and property stocks fuelled by optimism about major infrastructure project roll-outs by the government and resilient demand for housing.
There are now four ‘hold’ calls and two ‘buy’ recommendations from six research houses covering the stock, according to Bloomberg. The consensus 12-month target price stands at 65 sen, slightly below MRCB’s current share price.
“All factors considered, we maintain our ‘neutral’ recommendation, as we believe that the positives are largely priced in for now,” said MIDF Amanah Investment Bank. “Rerating catalysts would come from faster- and larger-than-expected contract awards and stronger property sales.”
On Thursday, MRCB reported that its net profit for 1QFY2024 plunged 65% year-on-year to RM3 million, due to lower sales and billings, following the completion of two major projects. Earnings per share declined to 0.07 sen from 0.19 sen. Revenue fell 36% year-on-year to RM476.2 million.
On its part, MRCB said that it plans to focus on boosting cash flows by monetising its unsold completed stock amounting to RM342.9 million.
The property development and investment division had unbilled sales of RM387.3 million at the end of March, which will be recognised progressively over the construction period of the development projects for Alstonia, Lilium and Residensi Tujuh, the company noted.
As for the engineering, construction and environment segment, key growth drivers include the redevelopment of Stadium Shah Alam and the Kuala Lumpur Sentral Station, as well as the construction of five additional stations and other related works for the Light Rail Transit 3 (LRT3) project.
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Source: EdgeProp.my
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