NEXT For MRCB, Perdana

MRCB: It recorded higher numbers for first half 2014 ended June 30 2014 with profit after tax. Stripping out the gain from the divestment of its stake in DUKE of rm94.9 million, 1HFY2014 normalized earnings were rm35.6 million.

 

The encouraging 1HFY2014 numbers were mainly on account of higher revenue contributed by MRCB’s property development division. The higher earnings figure was particularly contributed by the improvement in the pace of progress on its ongoing property development projects.

Observers expect it to regain its upward trajectory from FY2015 onwards.

The group have completed several acquisitions – that is, acquiring the balance 51% equity interest in Penang Sentral Sdn Bhd and 40% in Excellent Bonanza Sdn Bhd.

In addition, now (Aug 2014) that MRCB can acquire the remaining 30% stake in PJ Sentral Development Sdn Bhd, it has greater earnings visibility moving forward.

Perdana: Some 88% of its offshore support vessels are on long term charters with their utilization levels being sustained at more than 90% from 2014 to 2016.

Perdana has one of the youngest fleet profiles in the domestic market, averaging 4.5 years and it is the largest AWB player in the region.

Expansion wise, it will take delivery of one 300 pax AWB by 4QFY2014 which is targeted for Shell’s chemical enhanced oil recovery job and two 500 pax AWBs in 1H2016. It has option to add tow more 500 pax AWBs in 2H2016.

Perdana’s net debt/gearing stood at rm546 million or 0.9 times as of June 2014. It is currently (Aug 2014) focusing on growth over maintaining its syariah compliant status. It has been reported that Perdana’s syariah compliant status may be removed at the next review in Nov 2014 by SC.

If that happens, its major shareholder LTH will likely have to sell down its 8.6% stake to another existing shareholder Dayang Enterprise (currently owns a 24.5% stake), which will trigger a GO.

Overall it is a growth stock (34% three year net profit compound annual growth rate) with undemanding valuations and an alternative to Ezion Holdings Ltd for a brownfield development play.