Construction and property stocks rally


“The KL Construction Index has climbed to a new high of price-to-earnings (P/E) ratio of 25.43 times on Monday – its highest since its lowest P/E ratio of 5.8 times in 2011 alongside with recent lifting of share performance for index heavyweights such as IJM and Gamuda.  “The uptick illustrates a conformance to higher macroeconomic activity in the construction sectors such as higher total conventional project awards coupled with the total loans disbursed by financial institutions,” said MIDF Research in a report yesterday.

“The KL Construction Index has climbed to a new high of price-to-earnings (P/E) ratio of 25.43 times on Monday – its highest since its lowest P/E ratio of 5.8 times in 2011 alongside with recent lifting of share performance for index heavyweights such as IJM and Gamuda. “The uptick illustrates a conformance to higher macroeconomic activity in the construction sectors such as higher total conventional project awards coupled with the total loans disbursed by financial institutions,” said MIDF Research in a report yesterday.

PETALING JAYA: Construction and property counters rallied led by George Kent (M) Bhd that hit another all-time high consecutively in two days as the sector is poised for an upcycle going forward this year.

The timing was good for George Kent which climbed to RM3.59, up 36 sen with 8.5 million shares traded yesterday.

The firm reported a good set of financial results on Monday.

Another construction and property outfit, Malaysian Resources Corp Bhd (MRCB), also climbed 12 sen to RM1.64, the highest since the last quarter of 2014. The counter saw 24.1 million shares changing hands.

Both George Kent and MRCB are the project delivery partners for the upcoming RM9bil light rail transit three from Bandar Utama to Johan Setia, Klang.

“The KL Construction Index has climbed to a new high of price-to-earnings (P/E) ratio of 25.43 times on Monday – its highest since its lowest P/E ratio of 5.8 times in 2011 alongside with recent lifting of share performance for index heavyweights such as IJM and Gamuda.

“The uptick illustrates a conformance to higher macroeconomic activity in the construction sectors such as higher total conventional project awards coupled with the total loans disbursed by financial institutions,” said MIDF Research in a report yesterday.

According to MIDF Research, the award of conventional projects rose aggressively with compounded average growth rate of (CAGR) 68.3% driven by segments of residential, infrastructure and new projects awarded in 2016.

“Currently, we are experiencing its positive impact derived from the surge in construction loans disbursed.

“For example, in January this year, the RM7.4bil loans disbursed were the highest since January 2014 combined with the aggressive rate of total conventional projects awarded,” it said.

Following suit was UEM Sunrise Bhd that added four sen to RM1.30 with 33 million shares traded.

Meanwhile, Gamuda Bhd that also hit an all time high of RM5.14 on Monday saw some profit taking and the counter was down two sen to RM5.12 with 7.2 million shares traded yesterday.

Kumpulan Perangsang Selangor Bhd (KPS) also added a hefty 32 sen to RM1.67, the highest since November 2014.

Both Gamuda and KPS are the shareholders of the Selangor water concessionaire, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) alongside tycoon Tan Sri Wan Azmi Wan Hamzah, which had passed the takeover deadline by the government due to pricing and valuation issues.

Any traction on this takeover will have an impact to both companies.

The rally of the these counters could also be influenced by the re-rating of the property sector to “overweight” from “neutral” due to improved residential loan and selective developers have started to show healthier headline sales, according to Kenanga Research.

Meanwhile, the benchmark FBM KLCI added 5.26 points to 1,754.67, its highest since May 2015. The market traded within a range of 9.17 points between an intra-day high of 1757.99 and a low of 1748.82 during the session.

Market breadth was positive with 496 gainers compared with 477 losers while 358 counters were unchanged.

Volume, however, fell to 4.57 billion shares worth RM3.28bil.

Construction , Property , market