Top Story : Construction – Give me your best shot! Peninsular boys Neutral
Sector Update
♦ News last month that IJM had been awarded two work packages for the Murum Access Road (RM246.7m) may be read by the market as a signal that the Sarawak construction market is beginning to open up.
♦ Some argue that Sarawak’s construction market was never quite “closed” to start with. Peninsular boys had all along been casually bidding/lobbying for selective public jobs and only turned aggressive recently.
♦ Sarawak-based contractors generally do not feel “under siege” because: 1) Structurally, Sarawak-based contractors are more competitive than the Peninsular boys in Sarawak; and 2) They believe there will be enough jobs to go around in Sarawak.
♦ The three remaining packages of the Murum Access Road worth about RM200m each are likely to stay with Sarawak-based players.
♦ We believe the market should not read too much into IJM’s Sarawak jobs. Maintain Neutral.
RHB Equity - 4 May 2010 (Construction, Semiconductor, Kencana, Daibochi, Hunza; Technical: Proton)
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