AMRESEARCH maintains an "overweight" stance on the construction sector after IJM Corp Bhd bagged two contracts worth a combined RM247 million in Sarawak this week.The stockbroker likes IJM, Gamuda, WCT, Naim Holdings Bhd and Hock Seng Lee in the sector.
"We expect a re-acceleration of contract awards ahead of the unveiling of the 10th Malaysia Plan in June," AmResearch said in a report yesterday. "This will be further lifted by a recovery in construction margins and gradual revitalisation of order flows abroad - notably in India, the Middle East and Vietnam.""We understand that the Murum Dam access road project consists of five main packages worth between RM700 million and RM800 million. Access roads are crucial to improve connectivity to the RM3 billion Murum Hydroelectric Dam - constructed by China's Three Gorges Project Corp Ltd.""Award of first two packages to IJM will likely prod rollout of the project's three remaining packages worth an estimated RM500 million-RM600mil soon.
Our channel checks indicate that Hock Seng Lee appears to be a frontrunner for at least two of three packages - given their solid track record as an infrastructure/land reclamation specialist in Sarawak.""Latest development validates our growing conviction of intensifying contract flows from Sarawak, ahead of its state elections. Award of the work packages for the Murum Dam access roads to IJM follows a Business Times report earlier this week that up to eight contractors had been shortlisted for upgrading Sibu Airport."
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