MRCB proves capability in work on National Sports Complex

Malaysian Resources Corp Bhd (July 5, RM1.43)

Maintain buy with an unchanged fair value (FV) of RM1.89: We make no changes to our earnings forecasts and FV, based on a 10% discount to Malaysian Resources Corp Bhd’s (MRCB) revalued net asset valuation.

Key risks to our call include lower-than-expected take-up of its property development projects and delays in its construction projects.

In a site visit arranged by MRCB’s management to the newly refurbished Kuala Lumpur Sports City (previously known as the National Sports Complex), we visited the National Stadium, Axiata Indoor Stadium, Aquatic Centre and surrounding area.

We were encouraged by the refurbishment work done by MRCB on the facilities and area. MRCB will manage to complete the whole project ahead of schedule, which is set at 20 months.

Progress of the project now stands at 98%, with all the facilities on schedule to be handed over to the government by the end of this month.

This is well in time for the upcoming 29th Southeast Asian Games that will be held from Aug 19 to 30, 2017, and the 9th Asean Para Games from Sept 17 to 23, 2017.

We believe MRCB has done a decent job in completing the refurbishment work and improving the facilities up to international standards. We understand that there were 22 consultants involved, many of them international firms that are specialists.

This was to ensure that the facilities comply with international standards for the respective sport that is going to be held at a venue.

We were also briefed on the location of the land that MRCB is getting as compensation for undertaking the project. It is located north of the Kuala Lumpur Sports City, with a total land size of 76.14 acres (30.81ha).

Recall that MRCB has entered into a joint venture with the Employees Provident Fund to jointly develop the land as an integrated development comprising commercial and residential properties, with a total gross development value of RM21 billion, to be completed by 2038.

We believe MRCB has proven its capability to undertake the renovation and refurbishment of the National Sports Complex successfully up to the required standards, and we do not discount the possibility of the company bidding for similar projects in future. — AmInvestment Bank, July 5

This article first appeared in The Edge Financial Daily, on July 6, 2017.

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