Maintain BUY recommendation with target price (TP) of RM0.50
- Outstanding order book at estimated RM1bn. With no new jobs secured in 3QFY16, the Group’s outstanding orderbook is estimated at c.RM1bn. To recap, key job wins among others include development of new Kuala Lumpur Air Traffic Control Centre, jobs from MRT Corp and Pan Borneo Highway. Main on-going jobs are the Kelana Jaya LRT extension project, MRT1, and KL Eco City building contracts. Separately, one of the packages secured from MRT Corp was terminated yesterday. Further to the termination letter, TRC had initiated the negotiation and discussion with the MRT Corp’s Project Delivery Partner on the consequences of the termination and to ascertain the final quantum of compensation payable to TRC. The negotiation is still ongoing. The contract sum is small at only RM74.4m, and hence we believe will not have any material effect on earnings. Going forward, jobs in the pipeline, among others include LRT3, MRT2 rail links and Pan Borneo Sabah.
- Ara Damansara property development project. The long awaited Ara Damansara property project is now believed to be at the last stages of finalization, which consists of service apartments, hotel, office block and retail mall. The first launch is expected by 1QCY2017 and the expected GDV is c.RM1bn. We understand that the first phase is estimated to be c.RM300m.