KUALA LUMPUR: The government is likely to continue its commitment to prioritising infrastructure projects in 2015 as a measure to accelerate growth, says MIDF Research today.
In its quarterly statistics note on the construction sector, the research house said among the key projects the government would focus on is the affordable or low cost housing programme and the East Coast Economic Region.
"In addition, we believe the sector will continue to excite investors with timely progress updates on other large-scale projects such as the RM26 billion Tun Razak Exchange and Rapid, alongside power plants, going forward," it added.
MIDF Research also reaffirmed its "positive" rating on the construction sector on potential contract awards, construction sector contribution to the gross domestic product growth, and price-earnings ratio valuation.
Looking ahead, it expects the earnings estimate to stay stable at the prevailing level on expectations of better construction job replenishments, as well as improvement in construction work progress.
"Even though there is a timing issue related to the roll-out of several pending multi-billion projects, we opine investors should look at this as a strategic opportunity to accumulate construction stocks before the sector cycle resumes its upward momentum," it said.
The pace of contract awards was relatively sluggish in the third quarter of 2014 with only RM2.9 billion in contracts awarded to listed construction companies.
This was comparatively lower to the RM3 billion and RM7 billion worth of jobs given out in the third quarter of 2013 and second quarter of 2014 respectively.
"The sluggishness was, in our opinion, associated with the dearth of additional awards from ongoing big-ticket projects coupled with the festive season factor," said MIDF Research.
Local contractors were awarded two foreign contracts worth a marginal RM0.5 billion in the third quarter of 2014 with zero foreign contract awards in July and September this year.-- Bernama