KUALA LUMPUR: Malaysian Resources Corporation Bhd (MRCB) may see a stronger performance in the fourth quarter of financial year 2024 (4QFY24), driven by its construction segment that accounted for 77 per cent of its revenue in the third quarter, MIDF Research said.
The firm said as the Light Rapid Transit 3 (LRT3) project winds down, the ongoing progress of the Muara Sungai Pahang and Sungai Langat Phase 2 flood mitigation projects will contribute to MRCB's revenue and earnings.
"Future construction growth drivers include the redevelopment projects for the Shah Alam Stadium and KL Sentral station and the expected improvement in infrastructure job flows," MIDF Research said in a research note.
It raised MRCB's earnings estimates for FY24 by 9.0 per cent to account for the stronger than expected performance, mainly driven by the strong earnings in 2QFY24.
MIDF Research also noted that MRCB's FY25/26 earnings thereafter are forecasted to have a 5.0 per cent straight-line growth rate.
The firm maintained its "buy" call on MRCB with the target price remained unchanged at 67 sen a share.
According to MIDF Research, the company's core earnings in the first nine months of this year grew threefold to RM63 million, which is above its expectations.
Although revenue for its engineering, construction and environment segment came in 26 per cent lower at RM985 million, the firm noted that the operating profit jumped 65 per cent to RM145 million.
"Among the drivers of the stronger bottom line was the recognition of cost savings upon finalisation of accounts of certain projects coupled with better margins," it added.