MRCB’s Cyberjaya land sale to unlock value

PETALING JAYA: Malaysian Resources Corp Bhd’s (MRCB) recently proposed Cyberjaya land disposal is expected to strengthen its balance sheet and unlock value from its sizeable landbank.

The exercise could also give the group greater financial flexibility to pursue new infrastructure and data centre opportunities, although funding needs remain a key consideration.

In its report, MBSB Research said the proposed disposal of seven parcels of land in Cyberjaya, Selangor, should improve MRCB’s financial health, with the group expected to use most of the proceeds to pare down borrowings.

“Upon its land monetisation, MRCB intends to utilise RM350mil, or 84% of the proceeds, to repay borrowings, which is expected to generate annual gross interest savings of RM14.8mil,” the brokerage noted.

MBSB Research added that the transaction is expected to result in a pro forma gain of RM81.4mil, while gearing would improve from 0.55 times to 0.47 times and net gearing from 0.41 times to 0.31 times.

“All in, the proposed disposal crystallises a 27.2% return on investment on MRCB’s RM299.7mil investment made in March 2025, within just 17 months,” it said.

MBSB Research maintained its “buy” recommendation on MRCB with an unchanged target price of 40 sen, valuing the stock at a price-to-book (P/B) ratio of 0.39 times.

It said the group could see further momentum from major civil infrastructure works, including the Penang Mutiara Line, five reinstated Light Rail Transit 3 stations and the Shah Alam Sports Complex in 2026.

It also sees MRCB’s growing exposure to digital infrastructure as a longer-term growth driver, with the group developing a RM2.1bil, 65MW artificial intelligence (AI)-ready data centre in Bukit Jalil under a proposed 10-year lease.

“Near-term opportunities could continue to come from Bukit Jalil, where another 67 acres across two plots provide room for future data centre expansion beyond the initial 65MW development,” MBSB Research said.

Hong Leong Investment Bank (HLIB) Research also maintained its “buy” call on MRCB, with an unchanged target price of 50 sen.

The brokerage welcomed the handsome gains MRCB could make from the disposal of the seven parcels of land it bought in March 2025.

However, while HLIB Research acknowledged the positive impact on MRCB’s gearing, it cautioned that the benefit from lower interest costs may not be lasting.

“We have reservations on the durability of earnings uplift arising from interest savings, as MRCB may need to gear up again given its relatively modest RM661mil cash balance against sizeable working capital requirements to execute its RM8bil order book on hand,” it explained.

This is further compounded by funding needs for its RM2.1bil Bukit Jalil data centre project, HLIB Research highlighted.

To recap, MRCB has proposed selling 36.66 acres in Cyberjaya to Digital Cosmos Malaysia for RM419.1mil in cash.

Following surrender and re-alienation, the land will expand to 45.81 acres, with completion targeted for the fourth quarter of 2027.

One analyst told StarBiz that MRCB’s proposed land sale would give the company more room to manage its finances.

“It also allows the group to focus on bigger and more profitable infrastructure projects,” he added.