Con­struc­tion firms to ben­e­fit from in­fra­struc­ture spend­ing

The Star Malaysia - StarBiz - - News - By DAVID TAN david­tan@thes­tar.com.my

GE­ORGE TOWN: Con­struc­tion com­pa­nies like HSS En­gi­neers Bhd, TRC Syn­ergy and Econ­pile Hold­ings Bhd are among the con­struc­tion com­pa­nies that stand to ben­e­fit from gov­ern­ment spend­ing on in­fra­struc­ture projects.

Rakuten Trade Sdn Bhd vice-pres­i­dent (re­search) Vin­cent Lau told Star­Biz that the dif­fer­ent pack­ages of work for the PanBor­neo High­way in Sabah, the East Coast Rail Link (ECRL), and MRT 3 would be rolled out soon.

“The Pan-Bor­neo High­way in Sabah alone is about RM27­bil,” Lau spoke at a Rakuten Trade Ex­presso Work­shop 2018 in Pe­nang.

On top of gov­ern­ment jobs, these com­pa­nies also have size­able or­der books.

“HSS En­gi­neers has a com­bined or­der book of RM742mil, pro­vid­ing earn­ing vis­i­bil­ity for the next three years.

“The ten­der book is worth RM500mil,” Lau said.

TRC has an or­der book of RM2.5bil, which in­cludes con­tracts from LRT 3 (RM760mil) and MRT Line 2 pack­ages (RM348mil), ac­cord­ing to Lau.

“This pro­vides them earn­ing vis­i­bil­ity for the next two to three years.

“Econ­pile has se­cured new con­tracts worth RM442mil for the 2018 fi­nan­cial year, in­creas­ing its or­der book to RM1.3bil,” Lau said.

Be­sides con­struc­tion com­pa­nies, Lau also rec­om­mended Bi­nasat Com­mu­ni­ca­tions Bhd, Kel­ing­ton Group Bhd, KUB Malaysia Bhd and Straits In­ter Lo­gis­tics Bhd as its top stock picks.

“Bi­nasat has a large por­tion of re­cur­ring in­come via its op­er­a­tion and main­te­nance di­vi­sion which ac­counts for 48% of its rev­enue.

“KUB has com­pleted its ac­qui­si­tion of 1,534ha plan­ta­tion in Kin­abatan­gan, Sabah for RM100mil, which will con­trib­ute to its 2018 fi­nan­cial year net earn­ings.

“KUB has also ear­marked a piece of land in Petaling Jaya for de­vel­op­ment,” Lau said.

Ac­cord­ing to Lau, Kel­ing­ton has se­cured a 10-year con­tract worth RM20mil for an in­dus­trial gas busi­ness, which is a new growth area.

“The group is set to ben­e­fit from China’s chip ex­pan­sion to in­crease man­u­fac­tur­ing ca­pac­ity of mem­ory chips and in­te­grated cir­cuits un­der the ‘ Made in China 2025 gov­ern­ment ini­tia­tives,” Lau said.

He said the re­cov­ery of crude oil prices to around US$70 bodes well for Straits as this will heighten ship­ping ac­tiv­i­ties and the need for bunker­ing ser­vices.

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