‘Resumption of ECRL timely as catalyst for equity market’

KUALA LUMPUR: The decision to resume the East Coast Rail Link (ECRL) project after nine months of negotiations was timely, as it will become a catalyst for the equity market since the external environment has been very volatile, says Bank Islam Malaysia Bhd.

Its chief economist, Dr Mohd Afzanizam Abdul Rashid said the higher local participation in the project bodes well for the construction-related sector as the local contractors would stand to benefit.

“This, in turn, will have positive multiplier effects as there will be moredemandforbuildingmaterials such as steel and cement,” he told Bernama.

Mohd Afzanizam said in the long run, the project would promote the constructionofotherinfrastructure such as expressways and ports that would facilitate international trade.

However, MIDF Research still maintained a “neutral” stance on theconstructionsector,recognising that the expectation on the ECRL’s revival was already priced in.

“This was reflective on the KL construction index (KLCON) performance, which was seen movingfasterthanitsfundamentals, ahead of the announcements.

“Immediate beneficiaries of the ECRL project are Lafarge Malaysia (which produces cement, construction aggregates, and concrete)andHSSEngineers,where both counters have clinched sizable jobs from China Communications Construction (ECRL) Sdn Bhd (CCC) previously,” it said.

MIDF Research said the other potential beneficiaries in its coverage are Gabungan AQRS (buy, target price (TP) of RM1.87), Muhibbah Engineering (buy, TP: RM3.73), IJM Corp (neutral, TP: RM1.85), MRCB (buy, TP: RM0.90) and WCT (neutral, TP: RM0.88). — Bernama