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Govt may speed up rollout of mega projects (06-07-2010) |
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This is to keep growth intact amid shaky global recovery
PETALING JAYA: A shaky global economic recovery may prompt the Government to speed up the rollout of big construction projects at home to keep domestic growth intact. News from The Star, July 6, 2010. By Izwan Idris.
Mega projects that grabbed the headlines recently include the RM36bil mass rapid transit (MRT) project jointly proposed by Gamuda Bhd and MMC Corp Bhd, the RM7bil light rail transit (LRT) extension programme and the redevelopment of land belonging to the Federal Government.
The bulk of these potential contract awards are expected to go to the bigger players. The awards, if they materialise soon, would be a major boost for the sector.
“While we believe the market is fully aware that certain negative elements are still lingering in the sector, we feel that it is likely to ‘brave’ these negative elements and forge ahead of the curve, underpinned by the collective ‘buy-first-on-news’ mentality,” RHB Research Institute said in a note yesterday.
These so-called negative elements include slow pace of public project awards and the 23% cut in actual project development spending under the 10th Malaysian Plan as compared to the Ninth Malaysia Plan.
RHB Research yesterday upgraded the construction sector to overweight from neutral previously, buoyed by positive newsflow. It listed Gamuda Bhd as its top “tactical” pick, while Sunway Holdings Bhd ranked the highest on its “value” list.
Previous reports indicated that the MRT project might start as soon as early next year, while works to extend the LRT lines would commence by the end of the year.
There is yet to be a formal award of the proposed MRT project, or clear indication that the huge project would even take off soon despite being identified for implementation under the 10th Malaysia Plan.
OSK Research predicted the value of local contracts to be dished out this year to “easily surpass” the total RM10bil recorded in 2009.
The figure excludes potential award of LRT or MRT-related jobs, according to analyst Jeremy Goh who covers the sector at OSK Research.
The firm has a “neutral” view on the construction sector, largely because of unattractive valuations and “lack of significant re-rating” catalyst happening soon.
Shares in Gamuda had risen 22% year-to-date at yesterday’s close of RM3.15, while rival IJM Corp Bhd was up 10% at RM4.93. Construction and property player Malaysian Resources Corp Bhd (MRCB) closed at RM1.52 yesterday, up 22% year-to-date.
MRCB has been linked to the project to develop the Government land in Sungai Buloh, Selangor, although there has been no official award to the company so far.
RHB Research said the market was likely to react positively to the announcement of formal awards of Federal land parcels to “master developers” and the subsequent farming out of the sub-divided smaller land parcels to various developers.
“Given the scale of the projects and that most construction boys are already involved in property business, they are likely to get a slice of the action,” the firm said.
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JMBA News Flash
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Lafarge expects ‘slight’ growth on more robust project implementation
PETALING JAYA: Lafarge Malayan Cement Bhd is optimistic that local cement demand will grow slightly in the second half of the year on expectations of more robust implementation of ongoing and new infrastructure projects, said president and chief executive officer Bi Yong Chungunco. News from The Star, August 11, 2010. By Elaine Ang.
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HULU TERENGGANU- The Terengganu Government has allocated RM100 million this year to further develop the Kenyir Lake with various tourism-related facilities. News from Bernama, August 10, 2010.
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LOJING- The Works Ministry hopes to compile data on 16,000 hill slopes along Federal roads throughout the country to keep track of landslides that bring about hardship and loses to the people and the country. News from Bernama, August 10, 2010.
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KUALA LUMPUR- The feasibility study for the proposed Kuala Lumpur Mass Rapid Transit (MRT) system will be completed next month, Land Public Transport Commission (LTC) Chairman Tan Sri Syed Hamid Albar said Tuesday. News from Bernama, August 10, 2010.
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KUALA LUMPUR- The GreenBuild Asia 2011 will be a timely event for the local construction industry to attract foreign investments, especially in green building, says the Construction Industry Development Board (CIDB). News from Bernama, August 10, 2010.
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JAKARTA: Indonesia will prevent foreign firms from bidding for public construction contracts worth less than 100 billion rupiah (RM0.0351 billion), up from the previous cut off of 50 billion rupiah, an official said yesterday. News from NST, August 10, 2010.
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It is still a good time to buy property as the market is heading upwards, says Real Estate and Housing Developers' Association Malaysia Prices of residential properties will rise 10-20 per cent over the next six months because of cost and inflationary pressures, says Real Estate and Housing Developers' Association Malaysia (Rehda) president Datuk Michael K.C. Yam. News from NST, August 10, 2010.
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SEREMBAN- Seven new highways, including one that links Pahang and Kelantan, are expected to be build under the 10th Malaysia Plan (10MP) said Works Minister Datuk Shaziman Abu Mansor. News from Bernama, August 9, 2010.
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