Political overhang over construction projects lifted

KUALA LUMPUR: The political overhang over the construction sector has been lifted following the results of the recent state elections, which saw the maintenance of the status quo.

In a note, RHB Research said the government is likely to be in a stronger position to focus its efforts in rolling out infrastructure programmes and implementing its reform agenda, leading to a pick up in government job flows in the coming months.

“All in, we retain our ‘overweight’ call on the construction sector as the conclusion of the state elections may pave way for the rollout of infrastructure projects.

“The ongoing request for information exercise for the Kuala Lumpur-Singapore High Speed Rail or HSR may also help to lift sentiment on the sector,” said the research firm.

It said its top sector picks were Gamuda Bhd, Sunway Construction Bhd and Kerjaya Prospek Group Bhd.

According to RHB, infrastructure projects that has could see further progress following the conclusion of the elections include the Mass Rapid Transit 3 (MRT3) project that is undergoing a cost review, the Bayan Lepas Light Rail Transit (BLLRT), and the remaining phase of the Pan Borneo Highway.

It said the federal government’s nationwide flood mitigation projected, initially targetted to begin in June, worth RM10.9bil under a prequalified tender process could also see further development.

Data from the Construction Industry Development Board put the total value of construction jobs awarded in the first seven months of the year at RM59.4bil.

With regards to state-funded projects, the redevelopment of the Shah Alam Sports Complex may likely commence works in 4Q23, said RHB.

It said the main developer for the project is Malaysian Resources Corp, whereby development works (estimated to be between RM700mil and RM1bil) undertaken by the company may be satisfied via land swaps by the Selangor government.

As for the BLLRT, which may now be funded by the federal government, the incumbent control of the Penang government may facilitate smoother discussions with the federal government (target by year-end).