Top Story : Construction – Investors’ risk appetite to improve Neutral (up from UW)
Sector Update Sunway – Fair value unchanged at RM1.69 Outperform Fajarbaru – Fair value maintained at RM1.35 Outperform IJM Corp – Fair value upgraded to RM4.88 Market Perform (up from UP) HSL – Fair value unchanged at RM1.56 but share price has performed Market Perform (down from OP) Gamuda – Fair value unchanged at RM2.05 Underperform WCT – Fair value unchanged at RM2.10 Underperform - We are seeing improved investors’ risk appetite for construction stocks following: (1) The massive underperformance of the sector vis-à-vis the market in 4Q2009 and 1Q2010; and (2) A better sector news flow and new expectations leading up to the announcement of the 10th Malaysia Plan (10MP) in Jun 2010. - Gross development expenditure under the 10MP is projected at RM180bn, sharply lower than RM230bn under the 9MP. However, the shortfall will be met with RM50bn worth of projects to be carried out via PFI. - We are upgrading IJM’s recommendation to Market Perform from Underperform, but downgrading HSL to Market Perform from Outperform. Upgrade the construction sector from Underweight to Neutral.
RHB Equity 360°(, Gamuda, Kencana, TM, Maybank; Technical: Kencana)-26/03/2010
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