We remain OVERWEIGHT on the construction sector despite a subdued 2QFY13 amid increasing risk of certain high-profile mega projects being rescheduled as the Government steps up efforts to narrow the country’s fiscal deficit. We are comforted by the Government’s assurance and firm commitment towards the Klang Valley MRT project, which by itself will keep the sector buoyant until 2017.
- Generally subdued 2QFY13. The latest quarterly results of construction companies were generally subdued, largely due to slow billings from new jobs and variation orders (VO), cost pressure and the recognition of certain lumpy negative items. Out of the 11 construction companies under our coverage that reported results, three missed expectations while eight met our forecasts.
- MRT unscathed; sector okay. The current construction upcycle is underpinned largely by the MYR73bn Klang Valley MRT project. Given the scale of this project, its impact can be felt along the entire value chain of the sector. While other mega projects in the pipeline also generate work, their impact is much more limited. In other words, the local construction sector will continue to do well as long as the Klang Valley MRT project is intact. As such, we would be unfazed if one or two, or even more mega projects, are deferred. Our key “intact” test now is the Cabinet approval for Line 2 by the end of the year.
- Maintain OVERWEIGHT. The construction sector’s prospects are strong, buoyed by the MYR73bn Klang Valley MRT project as well as other on-going and shovel-ready mega projects. We advocate a two-pronged stock-picking strategy, i.e. going for: i) high-beta highly liquid big-cap Gamuda (GAM MK: BUY, FV: MYR5.45) that will take the lead in terms of reaction to new price catalysts such as the Cabinet’s approval for Line 2 of the Klang Valley MRT project, etc; and ii) undervalued and under-researched mid- and small-cap stocks such as Pintaras (PINT MK, BUY, FV: MYR7.00) (for good piling rates on capacity shortage in the market), and Naim (NHB MK: BUY, FV: MYR5.63) as well as Ahmad Zaki (AZR MK, BUY, FV: MYR1.33), which are trading at huge discounts to their break-up value.
Source: RHB
Chart | Stock Name | Last | Change | Volume |
---|
2024-10-04
GAMUDA2024-10-04
GAMUDA2024-10-04
GAMUDA2024-10-04
GAMUDA2024-10-04
GAMUDA2024-10-04
NAIM2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-03
GAMUDA2024-10-02
GAMUDA2024-10-02
GAMUDA2024-10-02
GAMUDA2024-10-02
GAMUDA2024-10-02
GAMUDA2024-10-02
GAMUDA2024-10-01
GAMUDA2024-10-01
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-30
GAMUDA2024-09-28
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
GAMUDA2024-09-27
PTARAS2024-09-26
GAMUDA2024-09-26
GAMUDA2024-09-26
GAMUDA2024-09-26
GAMUDA2024-09-26
GAMUDA2024-09-26
PTARAS2024-09-26
PTARAS2024-09-25
GAMUDA2024-09-25
GAMUDA2024-09-25
GAMUDA2024-09-25
GAMUDA2024-09-25
GAMUDA2024-09-25
GAMUDA2024-09-25
GAMUDA2024-09-24
GAMUDACreated by kiasutrader | Jun 14, 2016
Created by kiasutrader | May 05, 2016