CIMB Equities Research is maintaining its overweight on the CONSTRUCTION [] section as the proposed mass rapid transit (MRT) system for the Klang Valley/Kuala Lumpur.
The research house said on Tuesday, July 20 the MRT project is the potential locomotive for the construction sector as it will set in motion huge spillover benefits for contractors, at least over the life of the 10MP (2011-15).
“We believe that the project has a high chance of going through, with the potential big winner being Gamuda, the prime mover behind the proposal, along with MMC,” it said.
Other contractors with rail-related experience also stand to gain. For now, it is retaining its earnings forecasts and target prices while noting that Gamuda could see accretion of 5%-28% for its FY11-12 net profit and 3% to 14% for its target price should it bag the project.
“We continue to Overweight the construction sector. Our top picks are Gamuda and WCT which is likely to ride on the recovery of jobs from the Middle East and large-scale domestic infrastructure projects,” it said.
Written by CIMB Equities Research
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