Construction stocks in the green over Bandar M’sia


SHARES of local construction firms rose yesterday following the announcement on the revival of the multi-billion Bandar Malaysia project, but the rally is perceived as short-lived until further details on the development are made.

TA Securities Holdings Sdn Bhd senior analyst Ooi Beng Hooi said further details on the project are needed for a sustained rally, including the job scope to be made available to local contractors and the timeline for project implementation.

“The rally of construction stocks has largely been sentiment-driven and, if it persists for another one to two days, profit-taking is expected to come in,” he told The Malaysian Reserve (TMR).

Ekovest Bhd and Iskandar Waterfront City Bhd (IWC) were among the top gainers yesterday after seeing their combined market value increase by RM893 million.

This came after the federal government retained IWH-CREC Sdn Bhd as the master developer for the RM140 billion transit-oriented mixed development.

IWH-CREC is a joint-venture (JV) vehicle of Iskandar Waterfront Holdings Sdn Bhd (IWH), which owns a 37.76% interest in IWC, and China’s state-owned China Railway Engineering Corp (CREC).

The decision to revive the Bandar Malaysia project sent IWC’s shares higher by 30 sen to close at RM1.32, gaining 29.41% or RM250.92 million in market capitalisation.

Similarly, Ekovest’s shares closed 30 sen or 44.78% higher at 97 sen, resulting in a RM642 million gain in market value, while the company’s warrants traded 166.67% higher at 48 sen. Ekovest chairman Tan Sri Lim Kang Hoo is the controlling shareholder in IWC.

Elsewhere, buying interest was largely sentiment-driven and spread across the entire value chain of the construction sector from building materials to property and cement.

Of the 49 counters on Bursa Malaysia’s Kuala Lumpur Construction Index, only two were traded in the red yesterday — namely Hock Seng Lee Bhd and Pimpinan Ehsan Bhd — while six counters closed flat.

The index itself is up 40.7% year-to-date to 219.2 points on improving market sentiment which was bolstered by the revival of the Bandar Malaysia project and the East Coast Rail Link.

According to Rakuten Trade Sdn Bhd head research Kenny Yee Shen Pin, the impact of the rally on the broader market will be minimal as buying interest is concentrated in the construction sector alone.

“While currently limited to this sector, we foresee that buying interest will spill over into other subsectors from financials to building materials and consumer, depending on the project details to be announced,” he told TMR.

The two large-scale developments, coupled with the approval of over RM13.9 billion worth in infrastructure projects nationwide, have been a boon for the once-laggard construction sector.

Cement players Tasek Corp Bhd and Lafarge Malaysia Bhd were among the notable beneficiaries as their shares rose 12.82% and 13.3% respectively yesterday.

Malaysian Resources Corp Bhd and Gamuda Bhd closed higher at RM1.06 (up 10 sen) and RM3.35 (up 27 sen) respectively, following the news.

Both companies were brought on as the project delivery partners for the RM110 billion Kuala Lumpur-Singapore high-speed rail (HSR) before it was suspended indefinitely by the government.

Bandar Malaysia was intended as the main hub for the HSR line, and the former’s revival could be a route back for MRCB and Gamuda to partake in the development.