Today, MRCB has hit high heaven after the Edge weekly reported that MRCB together with Ekovest is on the verge of receiving a handsome letter of award from the government for a portion of the Klang Valley river cleaning project. The portion may be worth up to RM 8 billion while the total project size is estimated some RM 15 billion.
Projects of such a nature are not new to MRCB. It has a strong niche in environmental and river rehabilitation projects. Some of the projects it has completed are Phase 1 of the Kuala Sg Pahang project worth RM 258 million and the RM 20 million Kg Perai, Penang River project.
This is HwangDBS's take on this development.
Assuming a 50:50 JV with Ekovest is in the works, MRCB’s portion could be worth some RM 4 bllion,though this could be over a longer time period. Judging by pretax margins of similar projects done by MRCB, margins could be in the region of 12 to 15%, way higher and beyond that of construction related jobs state gives a return of of just 5 to 8%.
HwangDBS have taken quite conservative assumptions for new order wins of just RM 600 million per annum for FY11-FY12F leaving room to raise forecasts. A potential wildcard for this project is the development rights for the land surrounding the Klang river which is understand to be substantive.
As such HwangDBS has reiterate a a buy on MRCB with a TP of RM2.90 pershare.
So,let us see how precise is HwangDBS on the rise and further rise of MRCB's share prices.
No comments:
Post a Comment