CONSTRUCTION contracts from the private and public sectors have been notably active so far, with projects worth RM127 billion being awarded over the first eight months of 2024, 41 per cent higher than the RM90 billion recorded in the same period last year.

RHB Investment Bank analyst Adam Mohamed Rahim said the value of government projects awarded in the first eight months of this year stands at RM33.5 billion, nearly reaching the RM36 billion recorded for the entire year of 2023.

He said this indicates that contract awards from the public sector are increasingly on the rise.

He added that aside from the prospects for data centres (DC) and the Penang Light Rail Transit (LRT), a key piece of information eagerly awaited is the decision on whether an LRT system estimated at RM17 billion or an Elevated Autonomous Rapid Transit (EART) estimated at RM7 billion will be constructed in Johor.

He mentioned that this transport network aligns with the upcoming Johor-Singapore Special Economic Zone (JS-SEZ), which is expected to be formalised in the fourth quarter.

“Public consultations by MRT Corporation Sdn Bhd (MRT Corp) have also begun from 2 September to 2 December to gather public feedback on the alignment, indicating that the project is still in progress.

“Additionally, major highways that may see further development include the West Ipoh Span Expressway (approximately RM5.8 billion) and the Sungai Klang Link Expressway (approximately RM9 billion),” he said.

Adam noted that with many large contractor companies moving up the value chain to undertake more complex work such as DC facilities and industrial projects compared to real estate building projects, there may be growing opportunities for medium-sized contractors like Vestland Bhd and Inta Bina Group Bhd.

“Moreover, areas like Kuala Lumpur are becoming increasingly dense, with a population density reaching 8,518 people per square kilometre in 2023 compared to 7,092 people per square kilometre in 2013.

“This necessitates the development of more residential spaces to accommodate the growing population,” he said.

Adam also mentioned that RHB Investment Bank maintains a ‘overweight’ recommendation for the construction sector.

“Out of the 10 companies under our coverage that reported financial results, three met expectations, two exceeded expectations, and five did not meet estimates.

“Overall, we believe that contractor companies should continue to secure better completion bills, as evidenced by the total value of work done amounting to RM38.9 billion, the highest ever recorded,” he said.

The investment bank has named Gamuda Bhd, Kerjaya Prospek Bhd, and Sunway Construction Group Bhd as top picks due to their strong contract flows and good earnings visibility over the next two years. - Sept 12, 2024 

https://focusmalaysia.my/construction-contracts-surge-to-rm127-billion-in-2024-up-41-from-last-year/