MRCB named Kwasa Damansara infrastructure PDP

KUALA LUMPUR: Malaysian Resources Corp Bhd’s (MRCB) wholly-owned subsidiary MRCB Builders Sdn Bhd has been appointed the project delivery partner (PDP) to build the main infrastructure of Kwasa Damansara township. It will receive a fee of 5% of the estimated development cost of RM2.2 billion.

MRCB group managing director Tan Sri Mohamad Salim Fateh Din, along with his son and executive director Mohd Imran Mohamad Salim, yesterday signed the agreement to manage this project.

Representing developer Kwasa Land Sdn Bhd, a wholly-owned subsidiary of the Employees Provident Fund, was managing director Datuk Mohd Lotfy Mohd Noh and senior general manager of corporate services Nor Hazqiah Che Idris. Chairman Tan Sri Samsudin Osman was also present.

After the signing ceremony, Mohd Imran told reporters that the infrastructure works will be divided into multiple phases, and will begin within a year after obtaining the relevant authorities’ approvals and work permits. These infrastructure include those pertaining to water, electricity, roadworks, and earthworks.

“There are 1,600 acres (647ha) [worth of development works] that we are going to build in phases. All in all, we are looking at the timeline of five to six years,” he said.

Mohd Imran said some of the key performance indicators for MRCB include quality of work, meeting the agreed timeline, and working with Kwasa Land on how best to reduce costs.

Kwasa Damansara will sit on 2,330 acres of the former Rubber Research Institute Malaysia land in Sungai Buloh. The PDP scope of work includes project management services in relation to the design, procurement, and construction of the main infrastructure work.

RHB Research Institute Sdn Bhd analyst Loong Kok Wen told The Edge Financial Daily that the PDP fee MRCB will receive from Kwasa Land is positive for the group, as most of the project management fees will go directly to the bottom line and give more recurring income to the group.

“On a normalised basis, MRCB will get RM20 million-odd every year — if you divide the period to five years — from this project’s PDP fee. Add that to the PDP fee for its LRT3 (the third phase of light rail transit), it will get a combined normalised fee of about RM70 million,” she said.

While this is a value-accretive development for MRCB, Loong said she is keeping her target price on the company at RM1.60 after the discount for the first tranche of its share placement brought some dilution to the value. The 100 million MRCB placement shares were valued at RM1.09 apiece, which was 9.92% lower than the five-day volume-weighted average market price of RM1.21 up to April 13.

Mohd Imran’s family-owned Gapurna Sdn Bhd took up those placement shares. In total, MRCB wants to place out the remaining portion of the new 493.61 million or 20% of MRCB shares to bumiputera institutions, said Mohd Imran.

The idea is to make MRCB a bumiputera-status company, where it needs to have at least 35% of its shares owned by bumiputeras. It is currently at 33%, he said, with the company looking to bump the figure up to around 40%. Discussions are ongoing with some institutions, and MRCB will get the placement to be completed by the end of the year.

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This article first appeared in The Edge Financial Daily, on May 27, 2016. Subscribe to The Edge Financial Daily here.