KUALA LUMPUR (Oct 19): CIMB IB Research has maintained its “Underweight” rating on the construction sector and said it sees muted impact on the overall sector, with no upside surprises in new contracts.
Following the 11th Malaysia Plan mid-term review (11MPMTR), the research house in a note Oct 18 said its rating on the sector was predicated on the sector’s job downturn in 2019F.
“Revival of deferred or cancelled mega rail contracts is an upside risk.
“The next event to look out for is Budget 2019 announcement on Nov 2,” it said.
CIMB Research’s Sharizan Rosely and Kamarul Anwar said a slight positive that came out of the 11MPMTR was the public-private partnership model in contract procurement will be beefed up.
“We understand that this could take the form of pure cash contracts, or land swap deals.
“This is most relevant to selected small/medium-sized contractors, but we believe the tender environment will be very competitive (oversupply of idle capacity players) and hence unlikely to appeal to all large contractors.
“Clear proxies for this new angle remains limited, sector wide,” they said.— theedgemarkets.com