In a note today, the research firm said Sarawak and Sabah are also progressing well on infrastructure projects such as the Sarawak-funded Kuching Autonomous Rapid Transit.

Potential near-term catalysts include the retendering of the Johor Bahru-Singapore Rapid Transit System link packages and the approval for a Light Rail Transit connecting Penang Island to Seberang Perai.

RHB said it prefers contractors with diversified job portfolios and has retained Gamuda, Sunway Construction and Kerjaya Prospek as its top picks.

It said that these companies have a steady job replenishment trend and a strategic hedge against any downside risks from the domestic construction landscape.

This is due to their commendable exposure in overseas jobs (for Gamuda) and also private industrial ones (for Sunway Construction and Kerjaya Prospek), it added.

“All in, we retain our ‘overweight’ call. We advocate investors to be selective on counters that have credentials in local public infrastructure projects while still having decent exposure either in overseas markets or private industrial jobs, in addition to having a lean balance sheet,” said the research firm.

It added that such attributes were crucial to weather any downside risks that may arise in the form of unexpected labour shortage, slow rollout of public infrastructure projects and prolonged period of high building material costs.