Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: RHB
Construction sector
Upgrade to overweight: We are upgrading the construction sector to overweight from neutral as we foresee construction stocks will generally outperform the market in 2H2010, buoyed by news flow, particularly, from: (1) The RM36 billion KL mass rapid transit (MRT) project; (2) The RM7 billion Ampang and Kelana Jaya light rail transit (LRT) line extension project; and (3) Federal land deals.
Gamuda to ride on news flow from KL MRT. A series of events with regards to the KL MRT can buoy Gamuda's share price including: (1) the expected almost daily doses of news and commentaries on the project; (2) Cabinet approval; (3) the thumbs up for the project from businesses and the public; and (4) the commencement of the actual physical works.
Also, the market is likely to react positively to the announcement on the formal awards of federal land parcels to 'master developers' and the subsequent farming out of the subdivided smaller land parcels to various developers. Given the scale of the projects and that most construction boys are already involved in the property business, they are likely to get a slice of the action.
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 with its move to position itself ahead of the curve, underpinned by the collective 'buy-first-on-news' mentality.
Our top 'tactical' pick for the sector is Gamuda (trading buy, FV = RM3.85) as we believe its share price will be buoyed by the sustained news flow from the RM36 billion KL MRT project. Our top 'value' pick for the sector is Sunway (outperform, FV = RM2.35) due to its undemanding valuation of 7-8 times 1-year forward earnings on a fully-diluted basis, coupled with its strong earnings visibility stemming from its firm construction margins and growing non-construction profits. ' RHB Research Institute, July 5
This article appeared in The Edge Financial Daily, July 6, 2010.
Company Name: SUNWAY HOLDINGS BHD
Research House: RHB
Construction sector
Upgrade to overweight: We are upgrading the construction sector to overweight from neutral as we foresee construction stocks will generally outperform the market in 2H2010, buoyed by news flow, particularly, from: (1) The RM36 billion KL mass rapid transit (MRT) project; (2) The RM7 billion Ampang and Kelana Jaya light rail transit (LRT) line extension project; and (3) Federal land deals.
Gamuda to ride on news flow from KL MRT. A series of events with regards to the KL MRT can buoy Gamuda's share price including: (1) the expected almost daily doses of news and commentaries on the project; (2) Cabinet approval; (3) the thumbs up for the project from businesses and the public; and (4) the commencement of the actual physical works.
Also, the market is likely to react positively to the announcement on the formal awards of federal land parcels to 'master developers' and the subsequent farming out of the subdivided smaller land parcels to various developers. Given the scale of the projects and that most construction boys are already involved in the property business, they are likely to get a slice of the action.
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 with its move to position itself ahead of the curve, underpinned by the collective 'buy-first-on-news' mentality.
Our top 'tactical' pick for the sector is Gamuda (trading buy, FV = RM3.85) as we believe its share price will be buoyed by the sustained news flow from the RM36 billion KL MRT project. Our top 'value' pick for the sector is Sunway (outperform, FV = RM2.35) due to its undemanding valuation of 7-8 times 1-year forward earnings on a fully-diluted basis, coupled with its strong earnings visibility stemming from its firm construction margins and growing non-construction profits. ' RHB Research Institute, July 5
This article appeared in The Edge Financial Daily, July 6, 2010.
No comments:
Post a Comment