MRCB returns to black in 3Q, boosted by higher recognition from construction progress, sales of completed inventory

• The tremendous improvements were due to higher recognition from construction progress and sales of completed inventory which showed a marked pick-up after two years of Covid-19 related disruptions and numerous construction site closures, the group said in its latest financial results announcement on Wednesday (Nov 30).

KUALA LUMPUR (Nov 30): Malaysian Resources Corp Bhd (MRCB) registered a net profit of RM23.7 million for the third quarter ended Sept 30, 2022 (3QFY2022), versus RM32.16 million net loss in last year’s corresponding quarter, as revenue jumped 524% year-on-year to RM860 million.

In the nine months ended Sept 30, 2022 (9MFY2022), the construction, property development and management group recorded a net profit of RM51.83 million, compared with a net loss of RM59.37 million during the same period in 2021.

The tremendous improvements were due to higher recognition from construction progress and sales of completed inventory which showed a marked pick-up after two years of Covid-19 related disruptions and numerous construction site closures, the group said in its latest financial results announcement on Wednesday (Nov 30).

The group’s performance was also bolstered by the consolidation and construction progress of the LRT3 project company Setia Utama LRT3 Sdn Bhd.

For 9MFY2022, MRCB recorded revenue of RM2.37 billion from RM590.3 million in the corresponding period in 2021, and profit before tax of RM116.6 million from a loss before tax of RM62.6 million a year prior.

The group’s Bursa Malaysia filing on Wednesday showed it recorded operating profit of RM78.81 million in 3QFY2022, a turnaround from operating loss of RM16.51 million in 3QFY2021.

This is mainly derived from higher property sales recognised from construction progress and the sale of completed unsold inventory and units from ongoing property development projects that included Sentral Suites in KL Sentral, the 9 Seputeh mixed residential developments in Jalan Klang Lama and Alstonia in Bukit Rahman Putra, as well as construction progress from the LRT3 project.

Commenting on prospects for property development and investment division, MRCB said it will enhance cashflow by monetising its inventory of unsold completed stock, which stood at RM269 million on Sept 30, and looks forward to improved sales from foreign buyers with the opening of borders, particularly for VIVO 9 Seputeh development and St Regis units.

“In the meantime, the group will continue to closely monitor conditions in the broader economy and property market, particularly in light of the rising global interest rate cycle which has had a knock-on effect on Malaysian interest rates, as well as geopolitical tensions, revising its strategies and financial targets accordingly, including reviewing its future launches if conditions dictate,” it said.

As for the engineering, construction and environment division, MRCB said it continues to actively tender for more infrastructure contracting projects to replenish its order book. This division’s open tenders stood at RM30 billion as at Sept 30, said the group.

“The tender book does not include project proposals submitted that are undergoing direct negotiations, for example the Shah Alam Stadium rebuilding/refurbishment project and various flood mitigation solutions,” it explained.

On the other hand, MRCB’s external client orderbook stood at RM26.7 billion, while the unbilled portion was RM17.9 billion.

“This long-term order book will ensure that the division has a steady pipeline of contracts to sustain its business over the very long term, including the LRT3 project, which is due to be completed in 2024, and has achieved physical construction progress of 77% and financial progress of 71% as at Sept 30, 2022,” MRCB added.

At the closing bell on Wednesday, MRCB’s share price was down by 1.54% to 32 sen, with a market capitalisation of RM1.43 billion.