Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: MAYBANK
Construction sector
Maintain overweight: We visited three Middle Eastern cities (Doha, Abu Dhabi and Dubai) last week, and noted the possibility of a property supply glut still. We believe future spending would likely be concentrated on infrastructure works - roads, LRT lines, rail, power plants - with the Qatar Bahrain Friendship Bridge construction likely to commence this year. Malaysian construction players with local infrastructure expertise especially Gamuda Bhd and WCT Bhd could benefit.
There has been no let-up in construction spending in Abu Dhabi (UAE) and Doha (Qatar), with construction activities still in full swing at both locations. Local channel checks also implied likewise. Construction activities in Dubai (UAE) have however slowed considerably, with works having been halted at many project sites and tower cranes idle at many partially completed buildings.
Unsurprisingly, Malaysian contractors are unanimously bearish on their prospects in Dubai. IJM, the last of the big boys still in Dubai, will hand over its final project there, Fortune Executive, this month and shift its focus to Abu Dhabi.
Abu Dhabi and Doha are the commonly mentioned destinations for tenders among the Malaysian companies, which is of no surprise given the sizeable amount of spending undertaken by the local government entities. This includes a more than QR30 billion (circa RM30 billion) LRT and rail system at Qatar, as it embarks on its Vision 2030 programme. Other tender locations include Oman and Saudi Arabia. All locations share a common theme - the local governments are flushed with oil revenues.
Middle Eastern jobs now account for a relatively small proportion of the total outstanding order book for Gamuda (7%) and IJM (2%), but a sizeable chunk for Sunway (58%) and WCT (25%). We visited selected project sites - New Doha International Airport in Qatar (Gamuda-WCT), Rihan Heights (Sunway) and Fortune Executive Tower (IJM), both in Abu Dhabi, and saw good progress on the respective projects. For works that were recently completed, there have been no major collection issues.
Malaysian construction companies remain on the lookout for Middle Eastern contracts. Potential awards could yet trigger another re-rating of the construction stocks. We continue to overweight the sector in the run-up to the 10th Malaysia Plan and Sarawak state elections. We have buy ratings for all construction stocks under our coverage. - Maybank IB, May 13
This article appeared in The Edge Financial Daily, May 14, 2010.
Company Name: GAMUDA BHD
Research House: MAYBANK
Construction sector
Maintain overweight: We visited three Middle Eastern cities (Doha, Abu Dhabi and Dubai) last week, and noted the possibility of a property supply glut still. We believe future spending would likely be concentrated on infrastructure works - roads, LRT lines, rail, power plants - with the Qatar Bahrain Friendship Bridge construction likely to commence this year. Malaysian construction players with local infrastructure expertise especially Gamuda Bhd and WCT Bhd could benefit.
There has been no let-up in construction spending in Abu Dhabi (UAE) and Doha (Qatar), with construction activities still in full swing at both locations. Local channel checks also implied likewise. Construction activities in Dubai (UAE) have however slowed considerably, with works having been halted at many project sites and tower cranes idle at many partially completed buildings.
Unsurprisingly, Malaysian contractors are unanimously bearish on their prospects in Dubai. IJM, the last of the big boys still in Dubai, will hand over its final project there, Fortune Executive, this month and shift its focus to Abu Dhabi.
Abu Dhabi and Doha are the commonly mentioned destinations for tenders among the Malaysian companies, which is of no surprise given the sizeable amount of spending undertaken by the local government entities. This includes a more than QR30 billion (circa RM30 billion) LRT and rail system at Qatar, as it embarks on its Vision 2030 programme. Other tender locations include Oman and Saudi Arabia. All locations share a common theme - the local governments are flushed with oil revenues.
Middle Eastern jobs now account for a relatively small proportion of the total outstanding order book for Gamuda (7%) and IJM (2%), but a sizeable chunk for Sunway (58%) and WCT (25%). We visited selected project sites - New Doha International Airport in Qatar (Gamuda-WCT), Rihan Heights (Sunway) and Fortune Executive Tower (IJM), both in Abu Dhabi, and saw good progress on the respective projects. For works that were recently completed, there have been no major collection issues.
Malaysian construction companies remain on the lookout for Middle Eastern contracts. Potential awards could yet trigger another re-rating of the construction stocks. We continue to overweight the sector in the run-up to the 10th Malaysia Plan and Sarawak state elections. We have buy ratings for all construction stocks under our coverage. - Maybank IB, May 13
This article appeared in The Edge Financial Daily, May 14, 2010.
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