- In a note on Monday, RHB Research said that the federal government will likely be in a stronger position to focus on rolling out programmes and implementing its reform agenda, which could lead to government jobs picking up pace in the coming months.
KUALA LUMPUR (Aug 14): RHB Research maintained its "overweight" rating of the construction sector, after the outcome of the state polls on Saturday (Aug 12) maintained the status quo for the state governments, and removed the political overhang over the sector.
In a note on Monday, RHB Research said that the federal government will likely be in a stronger position to focus on rolling out programmes and implementing its reform agenda, which could lead to government jobs picking up pace in the coming months.
Examples of infrastructure projects gaining traction include the Mass Rapid Transit 3 (MRT3) project currently undergoing a cost review, the Bayan Lepas Light Rail Transit (BLLRT), and the remaining phase of the Pan Borneo Highway.
For the BLLRT, which may now be funded by the state, the incumbent Penang government which maintained its position may facilitate smoother discussions with the federal government to begin operations by year end.
More importantly, the research unit stated that the government’s nationwide flood mitigation projects worth RM10.9 billion that are currently under a pre-qualified tender process could also see further development. It was previously targeted to begin earlier in June.
“Hence, we may see further upside in terms of value of jobs awarded to contractors in the coming months,” it said, adding that the total value of construction jobs awarded year-to-date had reached RM59.4 billion, in comparison to last year’s figure of RM77.6 billion.
The research house named Gamuda Bhd, Sunway Construction Group Bhd (SunCon) and Kerjaya Prospek Group Bhd as its top picks.
RHB Research said the three companies are its favourites, given their steady job replenishment trends.
Gamuda is a strategic hedge against any downside risks from the domestic construction landscape, with good exposure to overseas jobs, while SunCon and Kerjaya Prospek have private industrial jobs as part of their portfolios, according to the research house.
All three groups had their "buy" calls retained, with a target price (TP) of RM5.27 for Gamuda, Kerjaya Prospek’s TP at RM1.55, and SunCon's TP at RM2.08.
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