Malaysia Rail Link Sdn Bhd (MRL) head of construction infra Noor Azlan Salleh said the packages, excluding those for tunnel works, would be offered in stages by China Communications Construction Co (CCCC) to all qualified local contractors. (Yesterday's picture shows tunelling works in progress. - Bernama)
KUALA LUMPUR: CIMB Equities Research is retaining its Underweight call for the construction sector and its reduce recommendation on Gamuda, Malaysian Resources Corp Bhd (MRCB) and YTL Corporation.
The Pakatan Harapan (PH) Cabinet had reviewed the viability of all mega projects approved by the previous administration.
“As this government intends to rein in public debt, there is the possibility that some projects will be axed. Attention has been given to the High Speed Rail (HSR) and the East Coast Rail Link (ECRL).
“We maintain Underweight as the negative sentiment will bog down the sector during the first 100 days of PH’s reform agenda,” it said.
CIMB Research said apart from the sheer value of the projects, key members of the administration have been reportedly questioning the projects’ viability.
PH has also singled out the ECRL, due to the political baggage it carries and the financing terms that were deemed detrimental to the government’s balance sheet.
“With this, we see pessimism brewing for Gamuda, YTL Corp and MRCB – the three listed contractors that were awarded the HSR project-delivery-partner (PDP) scope,” it said.
Lafarge, meanwhile, may be at risk for earlier having secured a two-plus-two-year contract to supply cement for ECRL, valued at RM270mil.
CIMB Research retained its reduce and target price of RM4.50 for Gamuda. Gamuda is the most exposed to rail contracts via MRT 3 (Circle Line) and KL-Singapore HSR.
Gamuda also owns four highway concessions and awaits PH’s decision on highway concessionaires.
As for MRCB, it also has a reduce and target price of 90 sen. The newly awarded HSR project-delivery-partner (PDP) scope could be under review while the outlook for divesting its Eastern Dispersal Link (EDL) highway may remain uncertain under the new government.
CIMB Research also kept its reduce for YTL Corp and target price of RM1.12.
“Prospects of being a proxy for Johor rail contracts under PH could diminish as HSR and Gemas-JB 2T are high-risk contracts that are unlikely to be a priority under the new government,” it said.
