Maybank IB Research maintains positive outlook for construction sector

KUALA LUMPUR: Maybank IB Research is maintaining a positive outlook for the construction sector, backed by potential flow of job awards, which is expected to pick up again in the second half of 2017 (2H17) and into 2018.

Earnings delivery of construction players with robust order books would be in the limelight as major infrastructure projects accelerated.

“Our sector's top ‘BUY' pick is IJM Corporation Bhd as a direct proxy to growing Chinese investments in Kuantan.

IJM's share price was one sen better at RM3.47, as at 11.00am, with 2.74 million shares traded.

The research house also picked Sunway Construction Group Bhd (SunCon) as its mid-cap choice as it was the only pure major construction stock with strong earnings visibility and potential for higher order book replenishment.

SunCon's share price increased one sen to RM2.03 with 25,000 shares changing hands.

Maybank IB also said the first half of 2017 could have seen a slower pace of infrastructure job being awarded after hitting a high of RM88 billion in 2016.

Based on historical trends, infrastructure job awards would pick up in the second half, expecting the major packages of the Klang Valley Light Railway Transit 3 to kick off first.

Maiden packages from the East Coast Rail Line and Gemas–JB double track rail should be awarded as wel, it said.

The tabling of 2018 Budget on Oct 27, 2017 is a key event to reaffirm infrastructure development with financing from direct government development expenditure and off the government's balance sheet.

Another construction company, Kerjaya was up four sen at RM3.56 with 199 200 shares changing hands. — Bernama