Construction firms to benefit from infrastructure spending
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.