TRC Synergy Berhad (TRC - 5054) is a one of the bumi status construction company that is listed in the KLSE. TRC had a good record in securing government infrastructure projects ranging from Peninsula Malaysia to East Malaysia, covering Sabah and Sarawak. TRC had exposure to notable infrastructure projects such as KVMRT 1 as well as LRT extension.
2015 had been proved to be a challenging year for TRC after being plagued with several incident on the construction of the LRT extension line. However, despite the challenging economy outlook, TRC had undertook the whole scenario in a diligent manner.
Current contribution to the group revenue are mainly from construction job secured in Kelana Jaya LRT extension project, KVMRT 1 as well as construction project on KL Eco City building. Given that most of it's LRT jobs are completed, it is currently pending on certificate of practical completion. To recap, TRC contract for the LRT extension is worth RM 950million. The issuance of the certificate of practical completion will see TRC recognizing at least 10% of the contract value, worth RM 95million for the next quarter result.
Construction to pick up in 2016
We believe that the construction arena in Malaysia will start to pick up again in 2016, fueled by more government infrastructure projects. The current notable projects are the KVMRT 2, LRT 3 rail links, Pan Borneo, SUKE and DASH highways. At the current stage with the latest RM 88 million project secured from Advanced Air Traffic (M) Sdn Bhd to develop a new Air Traffic Control Center in KLIA, TRC outstanding book order still stand healthy at RM 1.2billion.
TRC is expected to replenish it's book order to RM 2 billion through the year 2016 from infrastructural projects such as KVMRT 2.
Given the past working experience as well as TRC working relationship with Prasarana, TRC is in a very favorable position to clinch notable packages.
TRC technical outlook might be tricky as the stock had slid for 2 years, forming a long term downtrend line. However, it had successfully broken away from the long term down trend line at the end of 2015, consolidating at the range of RM 0.38 to RM 0.42.
The healthy consolidation is supported with a healthy financial ending for FYE 2015, with a EPS of 6.39 cents and a better NTA at RM 0.74 a share.
Conclusion
At the current price, TRC is deemed to be attractive given it's exposure towards coming up infrastructural projects as well as coming revenue/profit recognition from it's existing orderbook. TRC had also saw share buy back from major shareholder at the price range of RM 0.35.
Bone's short term TP : RM 0.45
TRC (5054) - TRC - A Better Tomorrow
http://bonescythe.blogspot.my/2016/03/trc-better-tomorrow.html
