RHB RESEARCH RAISES MGB'S CONTRACT WIN ESTIMATES TO RM500 MLN

KUALA LUMPUR, July 16 -- RHB Research has raised its contract win assumption for MGB Bhd to RM500 million for the financial year 2020 (FY 2020) from RM300 million previously as its year-to-date jobs awarded have exceeded its expectations.

Concurrently, RHB Research said it has also lifted MGB’s financial years 2020-2022 (FY 2020-2022) net earnings by three to five per cent.

MGB yesterday announced it has clinched its second contract win from its major shareholder LBS Bina Group Bhd's subsidiary worth RM215 million for for piling and building works for phase four of a proposed gated and guarded housing development in Bandar Alam Perdana, Kuala Selangor. 

“Based on these numbers, our calculations suggest second quarter (Q2 2020) revenue for MGB’s construction division could come in at RM50 million to RM60 million i.e. -65 per cent to - 70 per cent year-on-year, given the impact of the Movement Control Order.

“On a positive note, the current outstanding construction order book provides more than two years of earnings visibility, vis-a-vis average annual construction billings of RM700 milion to RM750 million,” it said in a note today.

RHB Research said it is maintaining its buy call on MGB with a higher target price of 58 sen from 56 sen previously.

“We continue to like MGB, as it should benefit from economies of scale for its industrialised building system (IBS) plant from outstanding construction orders, as well as its Idaman project,” it added.

At 11 am, the counter rose 2.5 sen to 49 sen with 1.3 million shares traded.

-- BERNAMA