Pan Borneo Highway-linked stocks gain momentum
Contruction firms surge on news government review on mega project will be finalised by next month
SHARES of construction companies linked to the Pan-Borneo Highway seem to have turned the corner following news that government review of mega projects will be finalised next month.
Three stocks, namely Econpile Holdings Bhd, KKB Engineering Bhd and TRC Synergy Bhd, gained yesterday. Bina Puri Holdings Bhd was the only such counter to have retreated.
KKB was the biggest winner among of all the stocks linked to the multi-billion ringgit project excluding Gamuda Bhd, which has been suspended ahead of an announcement on its 40 per centowned Syarikat Pengeluaran Air Selangor Sdn Bhd (Splash).
KKB gained 4.94 per cent in a single day. This was followed by Econpile, which rallied 2.86 per cent, and TRC, which gained 0.93 per cent, yesterday.
Gamuda is expected to trade higher upon resuming trading on Monday, fuelled by news of the RM2.55 billion Splash takeover offer by Pengurusan Air Selangor Sdn Bhd.
An analyst said the market had already priced in the risk earlier when the government announced in May that mega projects would be up for review.
“These stocks have good fundamentals and proven track record. The market must have predicted that the companies may re-win the contracts,” stock market analyst Nazzary Rosli told NST Business.
On Thursday, Works Minister Baru Bian said Putrajaya would review the awarded contracts for the Pan-Borneo Highway jobs in both Sabah and Sarawak due to the government’s “tight financial capabilities”.
He said only 12 packages had been awarded from a total of 35 work packages in Sabah. The completion rate of the 12 awarded packages ranged between one and 36 per cent.
On July 23, Baru reportedly said the government would honour all existing contracts for the RM29 billion highway project, unless there were issues raised against them.
The Sarawak portion was managed by project delivery partner (PDP) Lebuhraya Borneo Utara Sdn Bhd, while the Sabah component was managed by Borneo Highway PDP Sdn Bhd.
Borneo Highway PDP is 60 per cent-owned by Warisan Tarang Construction Sdn Bhd, with the other 40 per cent held by a joint venture between UEM Group and MMC Corp Bhd.