Bandar Malaysia revival sparks renewed buying of construction stocks

PETALING JAYA: The revival of the project, which came as a surprise to the market, sparked a fresh round of buying interest in construction and building materials stocks on Bursa today.

The construction index saw a jump of 16.52 points or 8.15% to 219.2 points against broad-based FBM KLCI’s flat close at 1,622.06 points.

Cement player Tasek Corp Bhd was the top gainer, surging 66 sen or 12.8% to RM5.81 on 31,100 shares done. Lafarge Malaysia Bhd, another supplier of the commodity, was up 31 sen or 13.3% to RM2.64.

DWL Resources Bhd, which announced its plan to bid for infrastructure contracts with Gadang Holdings Bhd, rose 37 sen or 28.2% to RM1.68. Gadang, meanwhile, gained 23 sen or 32.2% to 94.5 sen.



Last Friday, Prime Minister Tun Mohamad said the government welcomes the commitment by Iskandar Waterfront Holdings Bhd (IWH) and Railway Engineering Corp Sdn Bhd (CREC) to make an advance payment of RM500 million, in addition to the original deposit sum of RM741 million to be paid within 60 days from the date that the government officially reinstates the Bandar Malaysia project.

IWH and CREC were the winners of the Bandar Malaysia project before their status as the master developer was scrapped in May 2017.

Shares of Tycoon Tan Sri Lim Kang Hoo-linked Iskandar Waterfront City Bhd (IWCity) and Ekovest Bhd and hit limit-up today. At market close, both counters soared 30 sen to RM1.32 and 97 sen, respectively.

Tan is the executive vice-chairman of IWCity and executive chairman of Ekovest. IWCity is a subsidiary of IWH.

Gamuda Bhd and WCT Holdings Bhd rose 27 sen and 13 sen to RM3.35 and RM1.08 respectively, while steel player Ann Joo Resources Bhd increased 21 sen to RM1.86.

PublicInvest Research sees the revival of Bandar Malaysia as a positive surprise, saying it undoubtedly brightens the prospects of the local construction sector.

“Reinstatement of this project is an obvious shot-in-the-arm, particularly to the local construction sector. Given the greenfield nature of this project, players exposed to the initial infrastructure-based phases (access roads, earthworks, water and sewerage treatment plants, substantial piling works) could be sizeable opportunities.”

While maintaining a “neutral” call on the construction and property sectors at this juncture, the research house said trading opportunities abound, particularly for construction-related stocks.



PublicInvest Research said within its universe, big names like Gamuda, IJM Corp Bhd and WCT could be beneficiaries for the construction works.

Specialist contractors are also set to be winners such as Advancecon Holdings Bhd for earthworks, Econpile Holdings Bhd and Pintaras Jaya Bhd for piling, as well as Lafarge and Tasek.

“Other beneficiaries in our view are Malaysian Resources Corp Bhd, which was the joint-venture partner under the Bandar Malaysia Integrated Transportation Terminal and MMC Corp Bhd for the potential revival of Bandar Malaysia MRT 2 underground stations.”

PublicInvest Research also highlighted that back in 2016, IWH-CREC signed a memorandum of understanding with a consortium of international and Malaysian banks to provide funding for investors in the Bandar Malaysia project which included local banks such as CIMB Bank, Malaybank, RHB Bank and Affin Bank.

“As such, we do not discount the participation of local banks to fund the development.”

Source: The Sun Daily





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