KUALA LUMPUR – Several construction counters have rallied to new all time highs following the Budget 2017presentation last week due to the continuation of existing major infrastructure initiatives and positive earnings expectations ahead of the third quarter earnings season.
As at 1230PM, five counters, namely Sunway Construction Group Bhd, Ekovest Bhd, Gadang Holdings Bhd, Econpile Holdings Bhd, and George Kent (M) Bhd, have hit new highs or are currently hovering near record prices.
The shares of these companies have outperformed the broader market by a wide margin this year.
For example, shares of Ekovest have doubled since the beginning of the year while the shares of Sunway Construction and Gadang are up by 21% and 57% respectively to date.
The Bursa Malaysia Construction Index, which is the sector benchmark, have gained 5.72% this year, outperforming the FBM KLCI’s 1% decline to date.
A slew of new infrastructure projects were announced during the Budget 2017 presentation last Friday.
Among others, they include the RM55bil East Coast Rail Line, the construction of rural bridges and roads totaling RM1.2bil, the construction new schools for RM478mil, the reconstruction of destitute schools for RM570mil, and the improvement of the water supply network for RM732mil.
Additionally, the Government had reiterated its commitment towards major projects that are already underway including the Pan Borneo Highway and the five economic corridors comprising Iskandar Malaysia, East Coast Economic Region (ECER), Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE).
The Budget confirms our view that the prospects of the local construction sector remain bright, backed by various rail projects (MRT Line 2 and LRT 3), highways (Pan Borneo and the DUKE Highway extension), and mammoth property developments (KL118, and Kwasa Damansara),” said AmBank Research in a report today.