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MIDF Amanah Investment Bank maintains "positive" recommendation on construction sector

17/08/2022 01:15 PM

KUALA LUMPUR, Aug 17 (Bernama) -- MIDF Amanah Investment Bank Bhd has maintained “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 action plans to tackle this are 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 reimplement projects shelved in 2018 and long-term plans stated in Post COVID-19 Development Strategy 2030 and to build roads are in place,” it said.

It said tenders for the state-funded Second Trunk Road which spanned 225 kilometres 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 (buy; target price RM1.37) being the sole cement manufacturer in the state and also KKB Engineering (buy; target price RM1.50) which is an associate company of Cahya Mata and 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 which will focus on the prices of raw materials.


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