I was very sad when MRT3 was ‘shelved’ and I was very happy when I learnt that it is back on the table. I am now very happy that there are news that it will most probably be starting its tenders by end 2021. The reason is because the MRT2 will be ending by end 2022. Anyway, Phase 1 of the MRT2 will start very soon yeah. August was the earlier announced date. We will see. As for MRT3, let’s read latest news.
Article in themalaysianreserve.com MIDF analyst Khoo Zhen Ye said, “We believe the tender for MRT3 will be delayed to possibly 4Q21 instead of August as indicated by the rail developer, due to the rising Covid-19 cases and political uncertainty.” MIDF Amanah Investment Bank Bhd foresees the MRT3 to be the lowest-hanging fruit to be rolled out potentially in the second half of this year (2H21) to pump up the economy.
Khoo said other mega projects which are also likely to kick off this year are the Pan Borneo Highway post-Sarawak state elections in September 2021, the proposed Kuala Lumpur to Johor Baru high-speed rail project and the Klang Valley Double-Tracking Phase 2 project.
MIDF views the major beneficiaries of a rerating of the sector to be Gamuda Bhd with a ‘Buy’ call and a target price (TP) of RM4.20, IJM Corp Bhd (‘Buy’, TP: RM2.27), Sunway Construction Group Bhd (‘Buy’, TP: RM2.09) and Cahya Mata Sarawak Bhd (‘Buy’, TP: RM2.20). Please do read the full article here: Article in themalaysianreserve.com
Construction projects are usually long term yeah
We can feel very excited and we can move in to buy some related counters. We just need to remember that any construction of a mega project will likely take a long time. In other words, even if the stock prices would continue to rise when the profits increases, it also meant that it’s not immediate.
Plus the fact that construction companies would need to have continuous projects to sustain their earnings and it cannot just relying on one particular project. Else, this counter become a risky purchase instead. However, if we look at the counters which are giving out very good dividend yields, then it’s really a good buy and just enjoy the continuous yields.
For example, in image above showed that one of the counters Sunway Construction Group at the current price provides a yield of 2.5%. This is higher than typical FD rates in banks today. By the way, it may be much higher than putting money in FD. Just remember, higher returns equal to higher risks yeah. Happy reading.
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