KUALA LUMPUR: The construction sector is on track to meet the projected growth of 9.5 per cent as job awards pick up pace in the second quarter, said MIDF Research.
The research house expected Malaysia's construction sector to record better growth this year, versus the nine per cent projection made by the government, supported by the progress completion of pre-awarded construction works.
"The progress completion of many construction works awarded in 2012-13, particularly the Klang Valley Mass Rapid Transit (KVMRT) Line 1, which is currently 40 per cent completed, will support the sector's growth," it said in a statement Thursday.
MIDF Research said it also expected the launch of several other mega infrastructure and property developments in the second quarter of 2014, including the RM5.9 billion West Coast Expressway and the much-needed phase 1 of Langat 2 water treatment plant.
Positive news flows can also be expected with respect to the appointment of project delivery partner for the RM25 billion KVMRT2, RM5 billion Warisan Merdeka Tower and the Kwasa Damansara township development.
It said the projects were expected to spawn opportunities for the contractors to replenish their orderbooks and register robust earnings growth, or provide a cushion for contractors which have been affected by the government's cool down measures in the property sector.
It said the share prices of companies such as Gamuda, Eversendai and WCT Holdings have been under pressure recently as the market had apparently priced in the contractors' lower earnings growth amid risks associated with project delays and recent poor quarter earnings performance.
The research house is maintaining a positive stance on the construction sector, noting that stocks that are poised to benefit from a potential surge in mega contract awards are Gamuda, IJM Corp, WCT Holdings and MRCB, with target price of RM4.88, RM6.90, RM2.88 and RM1.45, respectively.
-- BERNAMA
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