KUALA LUMPUR, Jan 15 — AmBank Research has kept its “overweight” rating on the construction sector premised on a re-energised recovery of job flows in the first half of 2024 (1H 2024).
The research house said this is underpinned by a stable government and improving operating margins that are further catalysed by prolific overseas jobs.
“We acknowledge that the new Yang di-Pertuan Agong, together with re-energised excitement in infrastructural and property developments in Johor, could catalyse positive investor sentiments for the sector, especially for interested parties,” it said in a note today.
On the Kuala Lumpur-Singapore High-Speed Rail (HSR) project, AmBank Research said Johor will be home to two major maintenance facilities with a main depot located north of Iskandar Puteri Station for all the HSR train maintenance and a heavy maintenance base to be located near Muar station for maintenance of the track, power supply and signalling systems.
It noted that the earlier concept designs for all HSR stations involved Bandar Malaysia, Sepang-Putrajaya, Seremban, Ayer Keroh, Muar, Batu Pahat and Iskandar Puteri in Malaysia as well as Jurong East in Singapore.
“For a project of this scale, we expect the federal and state governments to be involved in the lengthy and complex land acquisition process. The surrounding lands may be monetised to partly defray the costs of building the railway, stations and facilities.
“However, we do not discount further hurdles and reviews to this decades-long proposition, which could have additional route realignments before the government has reached a final investment decision against the backdrop of escalating construction costs,” it said.
Besides the HSR project, the Federal Government is evaluating the viability of the Johor light rail transit (LRT) project, potentially costing RM20 billion, while Penang explores a public-private partnership structure for its own RM10 billion Bayan Lepas LRT development.
Coupled with the award of six flood mitigation projects, potentially worth RM13 billion including flood mitigation works at Sungai Johor, the construction of the Sungai Klang-Sungai Rasau dual-function reservoir in Selangor and Sungai Golok Integrated River Basin Development Phase 3 in Kelantan, multiple new contracts are poised to be announced this year, AmBank Research said.
“Excluding ongoing projects, we estimate massive domestic projects worth up to RM240 billion (2.7 times the government’s forecast 2024 development expenditure) up for grabs,” it said.
On the RM45 billion Mass Rapid Transit Line 3 (MRT3), which was downscaled from RM50 billion earlier, it said the award of the projects would still support improving growth prospects for the sector.
“The tender submissions have been submitted with expiry in March 2024. Unless the tender is extended, we expect the MRT3 project to finally kick off in the second half of 2024,” it added. — Bernama
