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Tuesday, December 20, 2011

TRC - Landbanking Down Under (OSK)

TRC announced that it will be acquiring a parcel of land in Melbourne, Australia measuring 6,830 sqm for AUD11.5m (~RM36.2m). The parcel of land is located in the Richmond area, approximately 5km east of Melbourne. Currently, the land accommodates three buildings which are leased to six biotech companies with an annual return of AUD855,925 p.a. A planning application to redevelop the land into a commercial space and car parks has been submitted to the authorities and approval is expected to be granted soon.

Maintain BUY, RM0.76 FV. We have yet to impute the potential earnings contribution from this venture, although any impact is likely to be minimal. Our TRADING BUY rating is maintained with a FV of RM0.76, based on RNAV that imputes a construction PER of 10x on FY12 earnings. The potential to win some packages of the MRT (SBK line) elevated structures remains a key catalyst for TRC.

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