The largest award at the time of writing was Gadang Holdings Bhd’s RM410.87 million contract from the Public Works Department for the completion of the abandoned 300-bed Shah Alam Hospital announced on Tuesday.
Bina Puri Holdings Bhd on Monday won a smaller RM20.4 million contract from the National Housing Department (Jabatan Perumahan Negara) for construction at Taman Topaz in Dengkil, Selangor — which is understood to be the revival of abandoned housing.
Gadang rose to 68 sen intra-day yesterday on Bursa Malaysia before ending at 64 sen, up two sen or 3.23%.
Given that RM63 million was specifically allocated to rehabilitate 1,270 abandoned houses next year under the recently tabled Budget 2012, more job awards may come. This is on top of the RM40 million set aside for the restoration and maintenance of public and private low-cost housing and the whopping RM1 billion allocated to construct, improve and maintain amenities for schools nationwide.
Another sizeable project award will be for the rehabilitation of the 141-year-old Hospital Kuala Lumpur, for which RM300 million has been earmarked. Some RM50 million will go to constructing a new outpatient block, Prime Minister Datuk Seri Najib Razak said during the tabling of the budget last Friday. He also announced that RM6 billion worth of projects will be implemented through the special stimulus package in 2012.
That is not counting the RM5 billion for building roads and expanding clean water and electricity supply to rural areas, particularly in Sabah and Sarawak, next year. Even the lower-grade Class F contractors will get about RM500 million worth of jobs.
At least another RM1 billion has been set aside to construct amenities like multipurpose halls, suraus, drains, small bridges and street lights. Some RM50 million will go to add more football fields and RM15 million to build an additional 150 futsal courts.
Other contracts awarded on Tuesday included the RM308.9 million job to construct The Pinewood Iskandar Malaysia Studios by Sunway Bhd and RM268.79 million given to a unit of KUB Malaysia Bhd for associated works of the Kuala Lumpur International Airport 2 (KLIA2).
Sunway closed at its intra-day high of RM2.19 yesterday, up 13 sen or 6.31%. Hong Leong Investment Bank Research said Sunway offers deep value deeming the stock to be worth RM3.12 apiece.
Commenting on KUB’s win, AmResearch analyst Mak Hoy Ken said while some RM2.5 billion worth of construction jobs for KLIA2 have been awarded, there are more contracts, including an Express Rail Link (ERL) to connect KLIA2 to Kuala Lumpur International Airport (KLIA) and related platform works.
While most of the strategic infrastructure and property development projects mentioned in the budget speech and economic report were not new, the reassurance of the timeline of the implementation was a boost for the sector and contractors, Maybank Investment Bank Research analyst Wong Chew Hann wrote in a recent note.
“We continue to ‘overweight’ the sector,” she said, taking Gamuda Bhd as the top pick for the construction and building materials sector, given that it is expected to benefit from the Sungai Buloh-Kajang MRT tunnelling works worth RM7 billion to RM8 billion.
“While pricing under tender could pose a challenge, there are higher economic spin-offs if local contractors secure the job, which is an important consideration as global activities head for another slowdown.”
In the building materials sector, Chew also has “buy” recommendations for Lafarge Malayan Cement Bhd and Ann Joo Resources Bhd, whose earnings growth is forecast to be between 7% and 30% in 2012 to 2013, premised on a volume growth of between 6% and 13% and improved plant performance.
“We expect greater local demand growth in 2012/13 given the pipeline of large-scale construction works,” she wrote, noting that local cement and steel demand plateaued in 2010 and has seen a recovery of between 4% and 44% year-on-year in 1H11.
Expectations of more contract awards to follow may even have helped prop up the stock price of Malaysian Resources Corp Bhd (MRCB), which had been unaffected despite an unfortunate incident at one of its construction sites in KL Sentral, an observer said.
A stop-work order has reportedly been imposed to facilitate investigations after a part of the seven-storey NU Sentral mall under construction gave way and injured a Bangladeshi worker on Tuesday morning.
MRCB is listed among the beneficiaries of Budget 2012 by brokerage houses, including Kenanga Research, which has an “outperform” recommendation and a RM3.44 price target for the stock. MRCB rose to as high as RM1.93 intra-day yesterday before ending at RM1.89, up four sen or 2.16%.
Also “overweight” on the construction sector, Kenanga Research likes Gamuda, Benalec Holdings Bhd and Kimlun Corp Bhd.
“We expect a busy contract award [period] in 4Q11, which is mainly expected to be anchored by MRT contracts,” it said.
Written by Cindy Yeap, theedgemalaysia.com
No comments:
Post a Comment