Share
KUALA LUMPUR (Jan 19): CIMB Investment Bank Bhd said Malaysia's Budget 2016 revision was "unlikely to be a huge negative" for construction projects, in anticipation the government would continue to spend on high-impact jobs.
In a note today, CIMB analyst Sharizan Rosely said industry players had told the research firm that the budget revision was expected to pose a low risk on major cancellation of projects.
The government will announce the Budget 2016 revision this Jan 28 due to lower crude oil prices. The commodity forms a crucial component of the Malaysian economy and government revenue.
“Government officials preliminarily indicated a 2.3% (RM6 billion) cut to Budget 2016’s RM267 billion total allocation, based on a lower oil price assumption of US$30/barrel versus the original US$48.
“While postponement of selected projects is inevitable, our revisit of the distribution of projects under Budget 2016 shows that more than 90% of the jobs are high-priority. Industry players concurred that the risk of cancellation for these jobs is minimal. MRT 2, LRT 3 and Pan Borneo [Highway] are among the safe ones, Sharizan said.
Sharizan said builders like IJM Corp, Sunway Bhd, Mudajaya Corp Bhd, Gamuda Bhd and Bina Puri Holdings Bhd, which have formed consortiums with Sarawak contractors, were deemed frontrunners for the Pan Borneo Highway project.
Sharizan said CIMB maintained its "overweight" call for the sector, with Gamuda as its top big-cap pick and Muhibbah Engineering (M) Bhd as its preferred small/mid-cap stock.
TOP PICKS BY EDGEPROP
Isle of Botanica, Setia Eco Glades
Cyberjaya, Selangor
Liu Li Garden, Setia Eco Glades
Cyberjaya, Selangor
Jewels of Grasmere, Setia Marina
Cyberjaya, Selangor
Eastern Heritage, Setia Eco Glades
Cyberjaya, Selangor
KGSAAS Golf Club, Seksyen 13
Shah Alam, Selangor
