Malaysia - Infra Projects, Building Materials etc

[winston]

MRT3 gives earnings visibility cheer to firms

The MRT3 project will have an estimated cost of RM31bil and be fully operational by 2030.

CGS-CIMB Research said Gamuda Bhd will likely be the frontrunner for the MRT3 project.

“This is positive for Gamuda as the MMC – Gamuda joint venture is likely to emerge as the frontrunner for the underground turnkey portion, given its MRT 1 and 2 track record.”

Additionally, RHB Investment Bank said Sunway Construction could also be a potential beneficiary, having been awarded RM1.4bil worth of jobs for the MRT2 project.

“Other contractors that could stand a chance to participate in MRT3 include IJM and Malaysian Resources Corp Bhd”.

Source: The Star

https://www.thestar.com.my/business/bus ... m_content=

[winston]

MBAM says builders hit hard by skyrocketing materials cost, urges Govt to step in

by Izzul Ikram

The price of steel bars in February 2021 stood at RM2,680 per metric ton (MT), but jumped 30.6% to RM3,500 per MT in April 2022.

Bulk cement price, which was at RM210 per MT in February 2021, climbed 40% to RM350 per MT in April this year.

Diesel price has jumped 128.4% to RM4.34 per litre as of last month, from RM1.90 per litre in February last year.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... -govt-step

[winston]

Power trip for solar players

By GURMEET KAUR and RISEN JAYASEELAN

A mere 42% of winning bidders for LSS1 to LSS3 have managed to get their plants up and running within the stipulated deadline.

Winning bidders for LSS4 had submitted plans that entailed them seeking power tariffs ranging from 17.68 sen to 24.81 sen per kilowatt hour (kWh). The developers have until the end of 2023 to get their plants connected to the grid.

Under LSS1, the lowest bid was 39 sen per kWh.

Solar panel prices (which account for more than half of project costs minus land cost) have risen by more than 60%. TNB points out that besides the solar module price being much higher than expected, logistics costs have also risen multifold as compared with the pre-pandemic levels. Added to that, financing rates are rising.

Source: The Star

https://www.thestar.com.my/business/bus ... ar-players

[winston]

Contractors ail from rising building material costs

By THOMAS HUONG

Steel prices have gone up due to the Russia-Ukraine war, as these two countries are among the largest steel producers in the world.

Other challenges include labour shortages and supply chain kinks which can lead to delays.

MBAM points out that the price of steel bars had risen by 30.6% from RM2,680 per tonne in February 2021 to RM3,500 per tonne in April 2022.

Meanwhile, bulk cement rose 40% from RM210 to RM350, and diesel saw a whopping 128.4% jump from RM1.90 to RM4.34 per litre in the same period.

Source: The Star

https://www.thestar.com.my/business/bus ... rial-costs

[winston]

Construction – Malaysia
Positioning For A More Meaningful Recovery In 2023

The sector is expected to see a gradual recovery continue in 2H22, following healthy
yoy earnings growth in 4Q21 and 1Q22, driven by accelerated progress billings.

Labour shortage and higher building materials cost will continue to pressure the recovery momentum.

More meaningful recovery will be seen in 2023, supported by the roll-out of
infrastructure projects and higher productivity levels from the easing of the labour
shortage.

Maintain MARKET WEIGHT. Top picks: Gamuda and Kerjaya Prospek.

Source: UOBKH

https://research.uobkayhian.com/content ... f2b050f038

[winston]

Building Materials – Malaysia
Benefitting From Spillover Of Commodities Rally

Aluminum, ferroalloy and tin players, are expected to post strong earnings in 2Q22,
which offer an attractive trading catalyst.

This is due to the improved production yoy after the lockdown and spillover of record-high prices from 1Q22, benefitting from structurally favourable supply-demand dynamics.

We believe prices for the selected commodities have bottomed as current spot prices could be below some of the global producers’ cash production costs.

Maintain OVERWEIGHT. Top pick: Press Metal.

Source: UOBKH

https://research.uobkayhian.com/content ... 50013eafc9

[winston]

Building material makers take a hit

Press Metal Aluminium Holdings Bhd’s 2Q22 fell short of its forecast as the weaker-than-expected ASP negated higher plant utilisation of 97% compared with 93%, in the preceding quarter on plant maintenance.

United ULI Corp Bhd (Ulicorp) also missed expectations as “it marked down product selling prices in tandem with the sharp decline in the market price of input cold-rolled coil (CRC) to stay competitive, while it had locked in CRC inventory at high prices.

Ann Joo Resources Bhd’s 2Q22 core profit plunged 75% year-on-year, which was within its expectation as the spread earned over cost of goods sold evaporated given the declining steel prices.

Source: The Star

https://www.thestar.com.my/business/bus ... take-a-hit

[winston]

Construction – Malaysia
Uncertainty Remains In 2023

The delay in the rollout of mega infrastructure projects may slow the growth this year
amid the political uncertainty.

Contractors also lack opportunities this year given the absence of new mega infrastructure projects.

Besides the ongoing projects like Pan Borneo, ECRL and RTS, MRT3 is the only new mega project that will be rolled out in 2023.

However, the gradual easing of labour shortage may help to boost productivity
this year. Maintain MARKET WEIGHT. Top pick: Gamuda.

Source: UOBKH

https://research.uobkayhian.com/content ... dc3a88ecad

[winston]

Upside for building material players

China’s reopening has stimulated demand for aluminium, ferroalloy and tin.

UOBKH maintains an “overweight” call on the sector, with top stock picks being Press Metal Aluminium Holdings Bhd and OM Holdings Ltd (OMH).

Source: The Star

https://www.thestar.com.my/business/bus ... al-players

[winston]

Kenanga keeps ‘overweight’ on building materials, construction sectors

by Syafiqah Salim

OM Holdings Ltd, Engtex Group Bhd, Gamuda Bhd and Sunway Construction Group Bhd

Positive outlook for non-ferrous metals due to lingering global supply constraints and increased demand stemming from China’s reopening.

Less favourable for steel due to lethargic construction activity and the property market in China.

Potential in water piper makers, as the government is poised to accelerate the roll-out of water projects in both new water treatment plants and non-revenue water reduction initiatives” .

Kenanga also has "outperform" calls for Gamuda, with a TP of RM5.15, and Sunway Construction, with a TP of RM2.13, given their sizeable order backlogs and strong chances of garnering a slice of action in the imminent RM45 billion Mass Rapid Transit 3 project.

Source: theedgemarkets.com

https://www.theedgemarkets.com/node/661406