Construction stocks to look at, based on some of their recent movements/announcements in September 2019.

TRC Synergy Berhad

After seven months, the development of 500 1Malaysia Civil Servant Housing Development (PPA1M) residential units, 316 public residential units and 20 commercial units in Precinct 18, Putrajaya, at a gross development cost (GDC) of RM292.7 million will finally proceed, as Perbadanan Putrajaya has withdrawn the notice of termination. In a bourse filing today, TRC Synergy Bhd said its wholly-owned subsidiary TRC Land Sdn Bhd has today received a withdrawal of the notice of termination by Perbadanan Putrajaya. TRC Land was appointed the developer for the PPA1M project on Dec 4, 2015. The project has since been renamed Pembangunan Perumahan Penjawat Awam Malaysia (PPAM - DALUR). This project was previously axed 7 months ago. My contacts in TRC tell me that there were some intense negotiations that took place... The counter has been moving steadily upwards - and I would reckon it is poised to move more. Lets watch and see.

GDB Holdings Berhad

Ironically, GDB is a subcontractor/partner of TRC's. Earlier this year, GDB secured a RM 135mil job from TRC for their project at Ara Damansara. My sources in TRC told me that while they're about 6 months into the contract, the project has started to show some delays, not sure due to what, but it would be interesting to see. But anyways, GDB Holdings Bhd has clinched its largest single contract todate valued at RM517.0m for construction works on the Park Regent residential development located at Desa Park City. The Park Regent premium residential development comprises two 54-storey blocks with 505 apartment units on a five-storey podium. The contract, which will last 37 months starting 2nd December. My consultant friends told me that this project's initial budget was around RM 550-575mil as quoted by the QS. At RM 517mil, I am of the opinion that the margins could be seriously very low - but assuming 575 on a norm of 10% margin is right, then 517mil would be almost at cost. 

SUNWAY Construction Group Berhad

Sunway's construction arm, Sunway Construction Group Berhad won the Highest Return on Equity over 3 years award - awarded by The Edge Billion Ringgit Club 2019. SunCon’s 1HFY19 earnings of RM62m (-13% YoY) were below consensus expectations mainly due to continued delay in LRT3 package. Outstanding order book of RM5.8bn translates into 2.6x cover ratio and going forward they are expecting more jobs to be from regional opportunities. 

Despite this, they are still expected to do very well from now til the end. 

So, what counter would you be looking at today?