Construction sector buoyed by new market entrants
March 10, 2010, Wednesday
KUCHING: The construction sector is set to foresee changes in near future with new players shaping the industry.
UPHEAVAL: Construction sector to foresee changes in near future with new players shaping the industry.
RHB Research Institute Sdn Bhd (RHB Research) reported that the construction sector was undergoing an upheaval with less familiar names poised to be awarded Malaysia Airports’ new low-cost carrier termi-nal (LCCT) terminal and satellite building packages.
Historically back in January 2010, a 70: 30 joint venture (JV) between lesser known Bursa Malaysia-listed Gadang Holdings Bhd and Bukit Jerneh Quarry Sdn Bhd were successfully awarded the new LCCT’s Earthwork Package 2 worth RM 291.2 million, it reported.
It stated that currently with the formal award of the LCCT’s terminal and satellite building packages anticipated in the coming days, a sources story taken at the end of February had selected five bidders as the frontrunners.
The research house noted that they were IJM Corporation Bhd , Sunway Holdings Bhd, UEM Land Holdings Bhd – Bina Puri Holdings Bhd JV, Gadang Holdings Bhd – PPC JV and privately-held AHT Norlan – Carriage JV.
In other developments, RHB Research noted Malay-sia Airports had success-fully shortlisted bidders for its RM200 million parking apron package.
Nevertheless, whether a new runway would be built at Kuala Lumpur International Airport (KLIA) re-mained to be seen as there was still spare capacity at its existing runways, pointed out the research house.
Analysts happened to take a conservative overall perspective on the sector despite construction stocks’ current rich valuations.
The reduced development expenditure in 2010, Dong’s devaluation, the Dubai credit crisis and the apparent declining dominance of major players in large-scale projects were some of the reasons put forward, as RHB Research highlighted.
Furthermore, RHB Research Institute believed that the market under-appreciated two key risk areas namely possible delays in project imple-mentation and sub-par mar-gins due to stiff competition in their analysis.
It also reminded investors that their views were subject to risks as new order books secured by construction companies exceeded their assumptions and construction margins were boosted by steep falls in commodity prices.
