Development contract flows may enhance in 2022



KUALA LUMPUR: Following a muted begin to the 12 months, contract flows within the development sector may see gradual enchancment because the nation enters the endemic stage of Covid-19, stated Hong Leong Funding Financial institution (HLIB) analysis.

The analysis agency stated in a word that ongoing rollouts of current tasks just like the East Coast Rail Hyperlink, Pan Borneo Freeway Sabah and Sarawak, Johor-Singapore Speedy Transit System and Central Backbone Street may assist help job flows transferring ahead in 2022.

These tasks would assist to ramp up the rollout of jobs after a gradual begin to the 12 months the place solely RM2.2bil of home awards had been doled out to listed contractors.

Based on HLIB, the whole contract worth was 65% decrease quarter-on-quarter and 54% much less year-on-year.

“Awards had been largely made up of personal sector (constructing/township) and solar-related jobs representing 66% and 14% of awards through the quarter underneath evaluate.

“The rest had been from government-related entities with the notable award being metropolis mosque job to AZRB (9%),” stated HLIB.

It famous the absence of public sector-related contracts comparable to water, roads, airports and public buildings through the quarter underneath evaluate.

In the meantime, HLIB added that the Rasau Bundle 1 mission was initially scheduled for 1Q22 however has seen delays pending the grant approval.

“We additionally look ahead to the rollout of Sarawak Metro which prices RM6bn in 2H22.

“Ought to issues proceed easily, early stage awards for the MRT3 may are available late 2022,” it added.

When it comes to draw back danger, HLIB stated there’s rising concern over personal sector flows resulting from hovering supplies costs and its impression on numerous mission rollouts.

It famous that metal bar and cement costs have risen sharply larger by about 20% and 40% respectively in 1Q22 resulting from inflationary pressures.

“We proceed to anticipate sector protection earnings to get better this 12 months however draw back dangers versus our expectation is rising ought to latest steep prices escalation persists,” it added.

HLIB retained its “impartial” sector name with its most popular shares being SunCon (TP: RM1.84) and Kimlun (TP: 99 sen) within the mid-cap and small-cap areas respectively.

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