KUALA LUMPUR: Diversified contractors that participated in its15th Annual Malaysia Corporate Day (MCD 2023) are generally more optimistic about the sector outlook in 2023 compared to 2022, CGS-CIMB Research said.
Analyst Sharizan Rosely said the companies were hopeful that with the post-general elections (GE15) political overhang out of the way, the construction sector landscape would improve and job rollout would regain momentum.
"While there was little expectation that new projects would be announced, the spotlight in the first half (1H) of 2023 would be on two key events - re-tabling of Budget 2023 on Feb 24 and potential changes or review, and status of the RM32 billion Mass Rapid Transit 3 (Circle Line) (MRT 3) project and whether it would proceed in its current form/project structure or cost," he said in a note today.
Sharizan said three diversified contractors, Gamuda Bhd, IJM Corp Bhd and Malaysian Resources Corp Bhd (MRCB), and one engineering consultancy player, HSS Engineers Bhd, were of the collective view that the MRT 3 project would proceed.
However, he said most did not discount the possibility that the project might be subjected to minor review/refinement in costing and, in the worst case, tender or awards could be slightly delayed to the later part of 1H 2023.
This was against the earlier expectations that the tender will be awarded in the first quarter (Q1) of 2023.
"IJM Corp and MRCB have, via their own consortiums, submitted bids for all three civil works packages while Gamuda is vying for one tender for the largest underground portion," he added.
CGS-CIMB has maintained its "Neutral" sector rating.
Sharizan said the firm still prefered the following themes - strong domestic and overseas execution track record, potential frontrunners for sizeable MRT 3 packages, beneficiaries of asset restructuring/monetisation, and aggressive strategies to grow renewable energy recurring income base.
"Gamuda remains our top pick as its regionalisation strategies are well ahead of other contractors' while IJM Corp is a sector big-cap laggard with an asset monetisation/special dividend angle.
"HSS Engineers offers attractive risk-reward at current levels as contract newsflow could pick up in 1H 2023," he added.