Mitrajaya secures RM273.8m building job from STF Resources

Mitrajaya Holdings Bhd (April 17, RM1.32)

Maintain outperform with an unchanged target price of RM1.49: Last Friday, Mitrajaya Holdings Bhd announced that they have secured a RM273.8 million building job known as “A Centre of Excellence” from STF Resources Sdn Bhd. The building job is located at Lot 44, Jalan Dato’ Onn, Mukim Bandar Kuala Lumpur, Seksyen 51, Wilayah Persekutuan Kuala Lumpur and is slated for completion by April 2019 (24 months from now).

We are “neutral” about Mitrajaya’s first win of the year as it is well within our financial year 2017 (FY17) replenishment target of RM800 million — making up 34% of our target with a remainder of RM527 million to be achieved. Assuming profit before tax margins of 11%, we expect this building job to contribute about RM11.3 million to Mitrajaya’s bottom line for the next two years.

Currently, Mitrajaya’s outstanding order book stands at around RM1.8 billion, providing earnings visibility for another about 1.5 years. For FY17, we had targeted a replenishment of RM800 million, below management’s target guidance of RM1 billion. For their property arm, sales for their ongoing Wangsa 9 residency project remain sluggish with phase 2 registering only about 45% to 50% take-up since its launch in November 2014. That said, Wangsa 9’s unbilled sales of around RM150 million will provide visibility for another 1.5 years. Meanwhile, its South Africa division will see unbilled sales of 22 million rand (RM7 million) recognised progressively upon completion of the transfer of ownership in FY17.

Post award, we maintain our FY17 to FY18 earnings of RM102 million and RM99 million, respectively. — Kenanga Research, April 17

This article first appeared in The Edge Financial Daily, on April 18, 2017.

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