CIMB holds MRCB forecast pending progress on Ipoh Sentral JV
Among the conditions is the submission of ISSB's development plan to the relevant authorities.
"We expect material contributions from Ipoh Sentral to only kick in from FY28F onwards," the firm said in a note.
The JVDA was signed this month, following an earlier memorandum of agreement between MRCB and ISSB on January 23, 2025, to jointly develop the Ipoh Sentral mixed-use project. The development will span two parcels of land totalling 67 acres, currently owned by Railway Assets Corp, which is in the process of transferring the land to its wholly owned subsidiary, Railway Asset Holdings Sdn Bhd (RAHSB).
ISSB is a 50:50 joint venture between RAHSB and Silver Smart, a wholly owned entity of the State Secretary Perak (Inc). The land development and management rights were assigned to ISSB under an earlier agreement signed on Nov 29, 2024.
Based on a transit-orientated development (TOD) concept, Ipoh Sentral is located adjacent to the historic Ipoh train station. Marketed as a transformative hub for the city, the project will feature a dynamic mix of residential, commercial, office, and hospitality components.
With an estimated gross development value (GDV) of RM6.3 billion and projected development costs of RM5.6 billion, the project is expected to yield a total profit of RM630 million, or about RM32 million annually, CIMB Securities said in a note.
In exchange for the development rights, MRCB will pay ISSB RM348 million over 20 years, with a minimum guaranteed payment of RM198 million.
Through the JVDA, MRCB and ISSB will form an incorporated joint venture company to lead the 20-year development. The initial phase will focus on enhancing public spaces and amenities, while subsequent phases will introduce residential, commercial, retail, and transit components.
MRCB saw a weaker performance in the first quarter of 2025 but remains optimistic about its prospects, buoyed by RM5.6 billion in newly secured contracts expected to boost revenue in the coming years.
For the quarter ended March 31, the group posted a 54 per cent year-on-year decline in revenue to RM218.2 million, while profit before tax fell to RM4.9 million from RM19 million previously.
Despite the lower earnings, CIMB Securities has reiterated its "Buy" rating on MRCB, with an unchanged target price of 83 sen.
Year-to-date, the stock has posted a marginal 1 per cent gain. After hitting a low of around 38 sen in March, it has been on a steady recovery, trading between 52 sen and 55 sen this week. This puts MRCB's market capitalisation at roughly RM2.37 billion.
Ipoh Sentral is one of two key catalytic projects MRCB is undertaking in Ipoh, the other being the Ipoh Raya Integrated Park.
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