KUALA LUMPUR – MIDF Amanah Investment Bank Bhd has maintained a “positive” recommendation on the construction sector with encouraging developments being seen in Sarawak.
In a research note today, the investment bank said the Sarawak government is projecting a capital injection of about RM100 billion by 2028 envisioned to elevate the state into a developed economy status.
“The state government’s current focus is to look into sick projects, meaning those that were delayed or abandoned.
“About 84 sick projects have been identified in Sarawak and among the action plans to tackle this is to appoint rescue contractors,” it said.
The investment bank said this is suggesting that quite a number of projects would be re-tendered, which is a good opportunity for construction players to replenish their order books.
“The state is committed to reimplementing projects shelved in 2018, executing long-term plans stated in the Post Covid-19 Development Strategy 2030 and building more roads,” it said.
It said tenders for the state-funded Second Trunk Road which spanned 225km are expected to be called this year with seven work packages.
“There will be seven more packages next year. The entire project is expected to cost RM5.84 billion.
“While this is not a massive headwind for most of the companies under our coverage, this is a much-welcomed move for the industry in mitigating the downside risks,” it said.
The investment bank’s top picks for the Sarawak-themed play are Cahya Mata Sarawak Bhd (buy; target price RM1.37) being the sole cement manufacturer in the state and also KKB Engineering Bhd (buy; target price RM1.50), an associate company of Cahya Mata which is involved in civil construction and steel-related manufacturing.
Yesterday, Sarawak Premier Tan Sri Abang Johari Tun Openg said the state government is finalising an aid to assist construction players particularly in prices of raw materials. – Bernama, August 17, 2022
