KUALA LUMPUR: The Pan Borneo Highway, Mass Rapid Transit 3 (MRT3) and the Bayan Lepas Light Rail Transit (BLLRT) projects are some infrastructure projects that could see further development post-state elections, said RHB Investment Bank Bhd.
In a note today, it said more importantly, the federal government’s nationwide flood mitigation projects (initially targeted to begin in June) worth RM10.9 billion under a pre-qualified tender process could also see further development.
“Post-state elections, the federal government will likely be in a stronger position to focus on its efforts to roll out infrastructure programmes and implementing its reform agenda.
“Hence, we may see further upside in terms of value of jobs awarded to contractors in the coming months,” it said.
The total value of construction jobs awarded reached RM59.4 billion in the first seven months of 2023 versus RM77.6 billion in the same period a year earlier, according to data from the Construction Industry Development Board.
Meanwhile, it said state-funded projects such as the redevelopment of the Shah Alam Sports Complex may likely commence works in the fourth quarter of this year.
“The main developer for the project is Malaysian Resources Corp Bhd whereby development works (estimated at between RM700 million and RM1 billion) undertaken by the company may be satisfied via land swaps by the Selangor government.
“As for the BLLRT, which may now be funded by the federal government, the incumbent Penang government which maintained its position may facilitate smoother discussions with the federal government to roll out the BLLRT (target by year-end),” it said.
RHB Investment Bank retained its ‘overweight’ call on the construction sector as the conclusion of the state elections may pave the way for the rollout of infrastructure projects.
“The ongoing request for information on the Kuala Lumpur-Singapore High Speed Rail project may also help to lift sentiment on the sector,” it added.
RHB Investment Bank’s top picks are Gamuda, Sunway Construction (SCGB) and Kerjaya Prospek (KPG) given their steady job replenishment trend and strategic hedge against any downside risks from the domestic construction landscape amid their commendable exposure in overseas jobs (Gamuda) and also private industrial jobs (SCGB and KPG).
It said a key downside risk includes longer-than-expected delays in contract rollouts. – BERNAMA
