2015 would be another significant year for the construction sector since we believe that most mega infrastructure projects would still forge ahead despite fiscal deficit concerns. We expect more positive newflows from tendering activities and job awards for these projects, but the positives would be back-loaded in 2H15. The unveiling of the 11th Malaysia Plan (11MP) in mid-2015 should reiterate the government’s commitment in advancing infrastructure development. Sarawak construction would also attract the limelight as SCORE development accelerates and the Sarawak state election would be held by mid-2016.
Elsewhere, corporate exercises including the listing of Sunway’s construction arm and WCT’s malls are expected in 2Q15/4Q15. Nevertheless, overall new construction contracts in 2015 could be slower due to the subdued property market outlook.
We stay Overweight on the sector and like potential beneficiaries of infrastructure projects that have solid track records and niche expertise, particularly players that are poised to chalk record outstanding construction orderbooks - Gamuda, IJMC and HSL. The KLCon Index was stable (+0.4%) in 2014, but outperformed the KLCI (-5.7%). Sector valuation is however still undemanding with Gamuda (TP: RM 6.00), IJM (TP: RM 7.40) and HSL (TP: RM 2.15) trading at close to historical mean despite earnings growth potential.
Gamuda (TP: RM 6.00) is our Top Pick as the major contender for both the Penang Integrated Transportation project and KVMRT 2 tunneling project. CMS is our Top Pick for Sarawak construction as it rides on the robust construction activities in Sarawak.
Source: Maybank Research - 13 Jan 2015
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lotsofmoney
Low RM, high national and household debts, low crude price ( now only USD45 ), I am not too optimistic about the housing sector at all. Already the transaction volume is low. The property price will just crash next. So will all the construction companies. Stay away.
2015-01-13 14:05