CIMB Research overweight on construction sector

Contract awards are expected to remain strong in 2H16 with the expected roll out of the RM5.3bil SUKE and RM4.2bil DASH highways, and the RM9bil Light Rail Transit Line 3 (LRT3) projects.

CIMB Research said some of the prominent bidders are JV companies where partners comprise of one Peninsular Malaysia-based firm and an East Malaysia player.

“Based on our checks, the RM16bil (US$3.9bil) estimated cost is unchanged. YTD, two packages worth a combined RM3.2bil (US$780mil were awarded to Zecon-Kimlun JV (RM1.5bil) and HSL-Daya Maju JV (RM1.7bil). Indications are that at least four to five packages will be awarded over the coming weeks, with the balance in the later part of 2016. The RM16bil total construction covers a total alignment of 1,090km,” it said.