$MATRIX (5236.MY)$ FOR THE FINANCIAL YEAR ENDED 31 MARCH 202...

丰衣足食 OP : (KUALA LUMPUR 29th) Malaysian stocks fell one after another due to the US election last week, but the haze dissipated this week. Real estate and construction stocks took off again due to the imminent launch of several large-scale government projects and momentum such as data centers.

Societe Generale Investment Bank research believes that construction stocks will maintain strong trading momentum in the next few quarters as infrastructure, industrial or data center contract news provides upward momentum.

The bank pointed out that the growth prospects of the construction industry are mainly due to the MRT Third Route (MRT3) land acquisition, the Longxin High Speed Rail (HSR) project proposal, and the Smart Rail (ART) proposal proposed by Johor to be completed in August.

Melaka Securities, on the other hand, pointed out that investors may be boosted by the development of data centers, with a particular focus on the construction, real estate, utilities, building materials and technology industries.



Supported by various benefits, real estate and construction stocks have once again become sought after by investors. When the market closed, the real estate index reported 7176.43 points, up 32.24 points, while the construction index reported 306.65 points, starting at 2.3 points.

Four real estate and construction stocks are among the top 10 rising stocks. Condiwei (CVIEW, 5049, main board real estate) took the lead in real estate stocks. Other real estate stocks that made the list include Jixing Agency (CRESNDO, 6718, main board real estate), and PPB Group (PPB, 4065, main board consumption), which is also involved in the real estate business, also joined the list.

Construction stocks with high gains also include Hailey Group (HAILY, 0237, GEM) and Ipoh Engineering (IJM, 3336, main board construction); real estate stocks include Green Shengshi (ECOWLD, 8206, main board real estate) and Sennami Real Estate (SIMEPROP, 5288, main board real estate).

Construction stocks still have room to rise

According to research by Societe Generale Investment Bank, the estimated cost-benefit ratio of the Malaysian Construction Index is 19 to 20 times, which is 16 times higher than the construction industry's upward cycle in 2017. Thanks to the prevalence of industrial engineering (including data centers), it is believed that the construction index still has room to rise.

“Some medium to large contractors, such as GAMUDA (GAMUDA, 5398, main board construction) and KERJAYA Group (KERJAYA, 7161, main board construction), have less than 20 times the cost-benefit ratio. As a result, news of winning infrastructure, industrial or data center contracts is expected to push the index higher.”

The bank pointed out that contracts for the construction industry have remained stable, and it received a RM89 billion project in the first half of this year, which is higher than the same period last year (RM146.5 billion for the whole of last year).

“We believe that the rationalization of diesel subsidies will provide more fiscal space for the government to launch projects.”

Overall, the bank maintains an “plus” rating for the construction industry. The first choice is Jinwu University, KERJAYA Group, and Sunway Construction (SUNCON, 5263, main board construction), because the profit prospects of these companies over the next two years are worth looking forward to.