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Sunday, March 14, 2010

MRCB / 1651 - 2009 Q4

OSK TP: 1.75 (10 March 2010)
My decison: NOT BUY
Reason: Overvalue

My study based on 2009 Q4 report (number in '000):
- Higher revenue was recorded in most of the Group’s business segments contributed from the increased activities of its ongoing works. However, the higher revenue was partly offset by the lower contribution from the property development segment which enjoyed relatively higher revenue recognition in the preceding period due to a one-off land sale in KL Sentral development
- The turnaround to profitability was due to the overall improved operational results mainly contributed from the positive margins of its engineering and construction division arising from partial recovery of material cost stability and the positive impact of its value engineering cost control efforts. In addition, the loss in the preceding year was also due to the high finance cost arising from the one-off premium charged on the early settlement of a bond issued by a subsidiary.
- EPF Board is hence obliged to extend a conditional takeover offer under Part II of
the Malaysian Code on Takeovers and Mergers, 1998 to acquire all the remaining MRCB
shares not already owned by EPF; at an offer price of RM1.50
- My estimate next 4Q eps after 2009 Q4 result announced = 0.0136*4 = 0.0544, estimate PE on current price 1.5 = 27.39(DPS 0.01)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.011*4 = 0.044, estimate highest/lowest PE = 40.91/28.64
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0132*4 = 0.0528, estimate highest/lowest PE = 27.65/23.11

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