The issuances of tenders for the Mass Rapid Transit 3 (MRT3) Circle Line project are a shot in the arm for the construction sector.

They will boost the sector in terms of revenue generation and the multiplier effect from construction activities will be among the largest for the economy.

Mass Rapid Transit Corp Sdn Bhd (MRT Corp), the project developer and asset owner of MRT3, issued three tender notices for the civil main contractor (CMC) packages last Friday. The packages comprised the bulk of the construction cost of MRT3 at RM31bil in total based on initial estimations by MRT Corp.

MIDF Research, which is maintaining its “positive” stance on the sector, said the government’s commitment in pushing through mega infrastructure projects, starting with the MRT3, is a positive development for the construction sector.

The research house said MRT Corp has kept to its projected timeline of events since the government’s approval of the MRT3 in March.

“We are confident that the tenders would be awarded in the fourth quarter of the year as expected and for construction activities to kick off in the first quarter of next year.

“This will keep the construction players busy until 2030 with strong order book replenishments and the much-needed earnings visibility.

The revival of the MRT3 has injected optimism into the sector and MIDF said this might be a prelude to the potential revival of other mega projects that were canned after a change of government in 2018.

One of the projects is the Kuala Lumpur –Singapore High Speed Rail (HSR), it said, adding that the governments of Malaysia and Thailand have also agreed to set up a joint special committee to fine-tune matters for a proposed KL-Bangkok HSR.

With accordance to the growth in the sector, investors may lookout onto the following companies:

Gamuda Berhad (KLSE: 5398)

As one of the front-runners in mega projects, Gamuda is one of the companies for investor to lookout for, given that the earnings turnaround may set a re-rate opportunity for the company.

IJM Corporation Berhad (KLSE: 3336)

Being one of the many front-runners in the mega projects, IJM is likely to benefit from the positive construction outlook too. Several shares buy backs are being done by the company hence elevated support may be seen in future.

OCR Group Berhad (KLSE: 7071)

A controversial pick, but given how the company had good profit turnaround in the quarters, we think OCR remains as one of the dark horse for 2022, especially when the company also provides Project Consultancy services to ride on the mega trends.