Malaysia - Infra Projects, Building Materials etc

[winston]

RHB keeps ‘overweight’ on construction sector on status quo after state polls

By Reyanna Ng

Examples of infrastructure projects gaining traction include the Mass Rapid Transit 3 (MRT3) project currently undergoing a cost review, the Bayan Lepas Light Rail Transit (BLLRT), and the remaining phase of the Pan Borneo Highway.

All three groups had their "buy" calls retained, with a target price (TP) of RM5.27 for Gamuda, Kerjaya Prospek’s TP at RM1.55, and SunCon's TP at RM2.08.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/678552

[winston]

RHB IB remains upbeat on construction sector, names Gamuda, Sunway Construction and Kerjaya Prospek as top picks

By Surin Murugiah

The value of construction works done in 2Q2023 reached RM32.4 billion, up 8.1% year-on-year (y-o-y).

The ample supply of labour, combined with receding material cost pressures, put contractors in a good position to not just ramp up the progress of their projects but also be ready to accept new jobs that may boost earnings visibility.

Key downside risks to the sector weighting, are longer-than-expected delays in contract rollouts, and larger-than-expected cost reductions related to the Mass Rapid Transit 3 project.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/681598

[winston]

Construction – Malaysia
Mixed 1H23 Results; All Eyes On Budget 2024

The sector delivered mixed 1H23 results with sector earnings moderating by 1.0% qoq
despite higher revenue.

We anticipate stronger 2H23 earnings on higher progress billing amid an easing of the labour shortage and lower building material prices.

Companies are expected to ride on the fresh rollout of mega projects (such as MRT3) and a more vibrant Johor property market.

Maintain MARKET WEIGHT.

Our top picks are Gamuda, Gabungan AQRS and Kerjaya Prospek Group.

Source: UOBKH

https://research.uobkayhian.com/content ... 83b64019df

[winston]

Constrn & Material - Overall
Key takeaways from MyHSR luncheon

Key takeaways:-
i) government may fund land acquisition;
ii) all interest parties start on a clean slate, and
iii) the southern corridor is a key alignment area.

We expect more clarity on the project’s structure, cost, TOD and timeline after the RFI concludes on 15 Nov 2023.

We continue to see YTL, MCement and HSS as potential key beneficiaries.

Maintain sector Overweight due to potential rollout of larger scale projects.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 2F1A5DE204

[winston]

Building Materials – Malaysia
2Q23 Results Within Expectations; Cement As Near-term Winner

2Q23 results are broadly in line.

We believe prices of selected industrial commodities have bottomed out and are poised for a rebound in 2024 due to:
a) easing inflation and peakish US interest rate cycle, and
b) ongoing supply tightness which will stimulate demand and support prices.

Meanwhile, cement stock Hume is poised to record stronger qoq earnings, reflecting high cement prices and production volume.

Maintain OVERWEIGHT. Top picks: HUME, Press Metal and OMH.

Source: UOBKH

https://research.uobkayhian.com/content ... 6a2de02394

[winston]

Kenanga keeps ‘overweight’ call on building material sector after 2Q2023 results

By Sufi Muhamad

Kenanga is positive on the aluminum sector due to the stable price of the commodity and demand for cable support systems in the near term, but the same cannot be said for the steel sector amid the sluggish property sector.

Kenanga also stated that there has not been any significant pick-up in demand for aluminium despite China’s reopening and its government’s efforts to stabilise the property market.

Kenanga is optimistic that steel prices could be buoyed by potential supply constraints, as well as stable cost inputs such as iron ore, scrap metal and coking coal.

Its top pick for the steel sector included Ann Joo Resources Bhd with an “underperform” call and a TP of 73 sen. It also picked Engtex Group Bhd (“Maintained perform”; TP: 58 sen).

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/682575

[winston]

RHB IB still upbeat on demand for aluminium and cement

By Surin Murugiah

Maintained its “overweight” rating of the basic materials sector, and said its outlook on demand for aluminium is still upbeat, expecting to see a meaningful recovery beyond 2024, thanks to still-low aluminium inventories, growing demand for solar panels, and the “green push” towards electric vehicles in Europe.

Demand for cement in the mid to long term, will be buoyed by roll-outs of major infrastructure projects, such as the Kuala Lumpur-Singapore High Speed Rail (HSR), Johor Bahru-Singapore Rapid Transit System (RTS), Bayan Lepas Light Rail Transit (BLLRT), and Mass Rapid Transit 3 (MRT3), signalling a potential pickup in construction activities in the peninsula.

“Key sector downside risks include a decline in LME aluminium prices, decelerating global economic growth, higher-than-expected raw material costs, lower-than-expected cement ASPs, and lower-than-expected cement production,” it said.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/682638

[winston]

RHB IB stays confident on construction and cement industry, Press Metal and Malayan Cement top picks

By Lee Ming Hui

In Malaysia, bulk cement prices continue to stay high at this moment, showing a y-o-y increase of 24.7% as of August, with the cost reaching RM380 per tonne.

“Meanwhile, the year-to-date average selling price is hovering at approximately RM380 per tonne.

The three-year average for bulk cement prices from 2019 to 2021 was around RM216.80 per tonne.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/685476

[winston]

Construction sector at double overweight

Demonstrating our greater confidence in policy continuity, we recommend a double
overweight on the construction sector.

Our key picks providing compelling exposure across the project spectrums are Gamuda, YTL, Sunway Construction, Sunway, IJM, Malayan Cement, Muhibbah Engineering and HSS Engineers.

Although the KL Construction index is up 21% YTD (partly driven by the property exposures of the larger listed construction companies, we suspect), it is trading at 45% below levels seen in mid-2017, prior to the fall of the Barisan Nasional government.

There was understandably some pushback to our thesis and we got the sense that few investors, if any, have taken such an aggressive positioning on construction just yet.

Source: CIMB

[winston]

not vested

Changes in major shareholders, tariff hike expectation prompt rally in water-related stocks

By Syafiqah Salim

On Nov 1, YTL Power became the group’s major shareholder with nearly a 19% stake, after acquiring the shares from Cheval Infrastructure Fund. Ranhill is expected to benefit from the increase in non-domestic water tariffs in Johor from January next year.

Salcon Bhd's share price has jumped over 67% following the emergence of Berjaya Corp Bhd (BCorp) as its third-largest shareholder on Nov 3.

PBA Holdings Bhd climbed 43.2% during the week, from 81 sen to close at RM1.16 on Thursday, despite an 18.4% decline in its net profit to RM36.76 million for the July-September 2023 quarter. PBA’s principal subsidiary Perbadanan Bekalan Air Pulau Pinang Sdn Bhd serves as the licensed operator for water supply in Penang.

Kumpulan Perangsang Selangor Bhd’s share price shot up 21% in the past week, closing at 80 sen on Thursday for a market value of RM429.9 million.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/689548