STOCK FOCUS OF THE DAY
MRCB : Favourable outlook as positive news flow continues BUY
We make no changes to our FY17-19F forecasts, but we increase our fair value to RM1.89 as we lower our discount to its RNAV to 10% (from 20%) as we believe the stock is ripe for further re-rating due to expected positive news flows in the upcoming months. Maintain BUY. MRCB’s stock price has had a good rally in 2017, increasing 27% year to date. We believe this was mainly due to consistent positive events in the company over the last few months which are favourable to its future outlook. We also believe the stock has the potential to further re-rate, due to the anticipated more positive news flows in the next few months.
The termination of the share sale agreement of the 60% stake in Bandar Malaysia to the IWH-CREC consortium recently has put the spotlight on MRCB, as MRCB has in January 2017 signed an MoU with Wondrous Vista Development Sdn Bhd and Bandar Malaysia Sdn Bhd to develop an integrated transportation hub in Bandar Malaysia. However, we understand that even with the share sale termination, MRCB’s MoU remains intact, as Bandar Malaysia Sdn Bhd is still the registered owner of the land. We also would not discount the possibility of MRCB having a bigger role in Bandar Malaysia development moving forward, due to its expertise in transit-oriented developments. We believe the outlook for MRCB in 2017 remains positive.
Construction : Sarawak a hotbed of building activities OVERWEIGHT
Hock Seng Lee : Earnings to be more visible BUY
Plantation Sector : Inventory up 3.0% MoM in April NEUTRAL
Digi.Com : Price wars drag on HOLD
STOCKS ON RADAR
O&C Resources, Kawan Food, P.I.E. Industrial, Malaysia Smelting Corporation
Malaysia : Manufacturing sector to thrive despite headwinds
Philippines : 40% probability for a rate hike in 2H2017
UK : BOE could be in a limbo
Timber sector : Sarawak timber companies take a hit from higher taxes
SP Setia : SP Setia secures sales of RM801m in Jan-April
Astro : Astro launches NJOI Now
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