LRT WORKS TO BENEFIT CONSTRUCTION STOCKS

The Petronas Twin Towers seen from Pertama Com...

Gamuda (buy; target price: RM4.25), IJM Corp (buy; TP: RM6), WCT (fully valued; TP: RM2.25) and MRCB (buy; TP: RM1.80)
CONSTRUCTION  players such as GAMUDA BHD [ ], IJM CORPORATION BHD [ ], WCT BHD [ ] and MALAYSIAN RESOURCES CORP [ ]oration Bhd could be potential beneficiaries from the plan to complete the light rail transit (LRT) network by end-2012, said HwangDBS Vickers Research Sdn Bhd.

It said the upgrading of over 7,000km of rural roads in the country over 2010-2012 could also be another source of jobs for the construction sector.
Commenting on the government’s transformational initiatives and plans, the research house said if implemented successfully, the programme would help transform the country and attract investments.

The government transformation programme (GTP) launched in April 2009 aims to transform the government into a more effective, advanced, safe and accountable entity.
Among the selected initiatives are upgrading urban public transportation, rural basic infrastructure and low-income households; widening access to quality education, crime reduction and combat corruption.

In a note yesterday, HwangDBS Vickers Research said it is impressed by some of the initiatives and ideas presented, which it views as an important first step.
“There will definitely be major challenges and resistance to some of the ideas. Implementation is a key test for the GTP.
“Successful execution of the GTP would help transform the country and attract investments,” it said.

It said the GTP had plenty of ideas, adding that for the upgrade of public transportation, interesting ideas include barriered lanes dedicated for bus use in selected corridors and limited stop bus routes that cut travel time using select expressways.

“The plans also reiterated the completion of the extension of the Light Rail Transit network by end-2012. For that to happen, the construction of this mega project estimated to be worth RM14 billion to RM15 billion needs to be awarded in 2010.

“Players such as Gamuda (buy; target price: RM4.25), IJM Corp (buy; TP: RM6), WCT (fully valued; TP: RM2.25) and MRCB (buy; TP: RM1.80) could be potential beneficiaries,” it said.

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