1Q12's domestic contracts soared 100% y-o-y and q-o-q toRM13.3bn, boosted by the progressive rollout of contracts from the KV MRT SBKline, which is expected to be completed by July 2017. We see the same factorfuelling the jobs flow for the remainder of 2012, as 6 out of the total 8packages for the elevated portion of the SBK line  worth a combined RM5bn-RM6bn  have yet to be awarded.  Maintain OVERWEIGHTon the sector as the deluge of positive news in the next few months is likelyto fire up the sector this year, with Gamuda (BUY, FV: RM4.58) and KimLun (BUY,FV: RM2.37) as our high conviction Top Buys.

Kicking off with abang. From a compilation of Bursa announcements, the total value of contractsawarded in 1Q12 amounted to RM16.0bn, up by over 100% both q-o-q and y-oy.These comprise RM13.0bn in local awards, with the Klang Valley My Rapid Transit(KV MRT) Sungai Buloh-Kajang (SBK) line making  up a sizeable  RM10.1bn while foreign contracts made up theremaining RM2.9bn. Excluding the  SBKrelated jobs,  local  jobs made up RM2.9bn of the total, rising4.9% y-o-y and 27.8% q-o-q, although their share of the total value ofcontracts was down 43.6ppts y-o-y and 11.2ppts q-o-q to 49.5%, partly due toScomi Engineering clinching a RM2.6bn contract to develop a monorail system in Manausin Brazil with 3 consortium partners.

Benefitting fromKV  MRT SBK line.  During 1Q12,  a sizeable RM10.1bn worth of contracts wasdished out in relation to the KV MRT SBK line. Being the first of the 3 lines underthe massive KV MRT project, the SBK line is targeted to be fully operational bymid-2017. To date, 27 works packages have been awarded to public listed andunlisted contractors, while tenders and awards for the remaining 63 packagesare expected to be mostly completed by 4Q12. Some of the key packages that havebeen awarded include Package v5 to IJM (TRADING BUY, FV: RM6.55), Package v6 toAZRB (NEUTRAL, FV:RM0.91), supply of segmental box girders from v1 to v4 toKimLun (BUY, FV: RM2.37), as well as the RM8.2bn underground portion which wentto MMC-Gamuda.

Source: OSK188