KUALA LUMPUR: OSK Investment Research is maintaining its Trading Buy call on MRCB at RM1.03 with a higher target price of RM1.42 from RM1.14 previously as it expects more upside to the share price given the likelihood of the company securing more jobs.

In a research note issued on April 29, it said the upside would also be enhanced by a recovery in the equity market, supported by its high beta relative the market.

Since it had we re-initiated coverage with a Trading Buy call in March, MRCB’s share price has appreciated by more than 20%.

“Following some adjustments to our sum-of-parts (SOP) valuation, we maintain our Trading Buy recommendation with a higher target price of RM1.42 from RM1.14 previously,” it said.

Despite the absence of major news for MRCB since its re-initiation in March, the news flow has generally still been quite decent as MRCB secured a RM110 million project to upgrade traffic infrastructure around KL Sentral development which was announced in the second stimulus package.

MRCB has also secured a three-year construction contract from the Urban Development Authority to build serviced apartments in Bangsar with total value of RM103 million.

“We expect more positive news for the construction sector and MRCB to flow in during 2H09, taking into consideration that the country’s new leadership would need a few months to re-strategise its development plans before rolling out projects with a high economic impact,” it said.

OSK Research said with the government’s commitment to proceed with the undersea cable project, this implies that the land-based transmission lines, also known as Bakun Energy Transmission Grid (BETG), would proceed as well.

“We view this as good news for local transmission companies, including MRCB’s wholly owned subsidiary Transmission Technology, which has expressed strong interest in the BETG project. As one of the two major power transmission players in Malaysia with an excellent track record, we believe Transmission Technology stands a good chance of securing a portion of the RM3-billion project, either on its own or through JV,” it said.