ECRL Revival To Benefit Contractors, Companies With Rail-Related Experience

16 Apr 2019

The revival of the East Coast Rail Link (ECRL) project is expected to benefit specialist contractors and firms with rail-related experience.

PublicInvest Research believes the beneficiaries could be well-known firms in the industry such as TSR Capital Bhd, FajarBaru Builder Group Bhd, Gadang Holdings Bhd, Gabungan AQRS Bhd, Ahmad Zaki Resources Bhd, Ekovest Bhd, IJM Corp, Sunway Construction Group Bhd and Gamuda, reported The Sun Daily.

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On the other hand, specialist contractors such as Kimlun Corporation Bhd as a precast components supplier, Econpile Holdings Bhd for piling, HSS Engineers Bhd for technical studies, Advancecon Holdings Bhd for earthworks, Tasek Corporation Bhd and Lafarge Cement could also emerge as beneficiaries.

PublicInvest, however, sees only two entities as frontrunners among these contractors and firms.

“The big winners could be Gamuda given its expertise, and IJM Corp for its engineering construction capabilities and strong presence in the East Coast Economic Region corridor. IJM also owns 60 percent stake in Kuantan Port including 700 acres of industrial land near the port,” it stated.

Aside from the ECRL project, PublicInvest Research sees no other major development or catalyst that could re-rate its stance on the sector.

“The 11th Malaysia Plan Mid-Term Review and Budget 2019 have thrown up guidance of lower growth going forward and reduction in development expenditure. With share prices of construction companies having already re-rated ahead of this somewhat-expected development, we believe much of the positives have already been priced-in,” it said.

Meanwhile, HLIB Research also sees Gamuda and IJM as beneficiaries of the revived project, along with Econpile, Gabungan AQRS, Advancecon and HSS Engineers.

“Although we do not expect the domestic construction industry prospects to go back to where they were during the period of pre-GE14, we opine that the worst is over for the industry.”


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