KUALA LUMPUR: MIDF Amanah Investment Bank Bhd has maintained a ‘positive’ call on the construction sector in view of an expected strong pipeline of civil and private jobs in the second half of 2024 (2H24).
The investment bank said the industry would see the expected implementation of government projects in 2H24 in tandem with the allocation under Budget 2024, which allocated RM90 billion for development expenditure (DE).
“From 24 January to 24 April, RM54.22 billion worth of projects have been awarded a 33,1% increase over the same period last year,” it said.
MIDF Amanah said Deputy Works Minister Datuk Seri Ahmad Maslan’s expectations of more civil job flows starting the middle of this year further reinforced its conviction that contractors would be kept busy over the next few years, with rising demand for industrial buildings, such as data centres, warehouses and semiconductor foundries, further boosting sentiments.
“The deputy minister estimated that about 40% (RM36 billion) of the DE is expected to be rolled out by mid-2024.
“He also said there were an estimated RM180 billion worth of jobs in the pipeline, comprising RM90 billion from the government’s DE and RM90 billion from the private sector,” it stated.
Citing his statement, MIDF said that among the expected projects in 2H24 is the Kuala Lumpur Sentral redevelopment, estimated to cost over RM1 billion and be undertaken by Malaysian Resources Corporation Bhd.
Another project, the Mutiara Light Transit Line in Penang with RM10 billion allocation under Budget 2024 is anticipated to begin in 4Q24 and to be completed by 2030.
The bank said that other notable projects include the Sabah-Sarawak Link Road (Phase 2) project with RM7.4 billion allocation under Budget 2024 and the Mass Rapid Transit 3 Circle Line project with tenders likely to be awarded by end-2024.
MIDF Amanah posited that its top picks are Gamuda with a ‘buy’ call and a target price (TP) of RM5.98, IJM Corp (‘buy’, TP RM2.57) and Malayan Cement (‘buy’, TP RM5.33)
“The construction sector had been among the best performing year-to-date which has seen the Bursa’s construction index rising 18.2%,” it added.
— BERNAMA
