Among the projects it said could be expedited are the RM45 billion Mass Rapid Transit 3 project and six flood mitigation projects, which are reportedly worth RM13 billion.
The flood mitigation projects include works in Sungai Johor, the construction of the Sungai Klang-Sungai Rasau dual-function reservoir, and the Sungai Golok Integrated River Basin Development Phase 3.
In its sectoral update today, Kenanga Research said a market-friendly outcome would also likely expedite the disbursement of the RM97 billion gross development expenditure under the 2023 federal budget.
The research firm noted that Ahmad Zaki Resources Bhd had already secured a RM122.5 million project on road works in Cameron Highlands in early June.
Meanwhile, it said the private sector construction market appears to be vibrant, underpinned by massive investments in new semiconductor foundries and data centres as multinational corporations shift their manufacturing base away from China to mitigate risks.
“These projects come with larger contract sizes ranging between RM1 billion and RM1.5 billion each, and a much shorter timeline versus conventional contracts, which enable contractors to command a premium.
“Notably, companies like Sunway Construction Group Bhd (SunCon) and Kerjaya Prospek Group Bhd have already benefitted from such contracts in calendar year 2022.
“Our top picks are Gamuda Bhd and SunCon as we believe they will extend their winning streaks for new jobs,” it said.
Overall, Kenanga Research is maintaining an “overweight” call on the construction sector as the sector’s dynamics are favourable for earnings growth in 2023.
This is contributed by the the gradual return of foreign workers that would alleviate labour shortages, and the lower prices of base metals like steel and aluminium, along with other key building materials such as diesel and bitumen.
“Furthermore, most new contracts currently under negotiation will incorporate the latest higher prices and include provisions for price variation to protect margins in case of significant swings in material prices.
“As a result, the overall margins should gradually improve as older low-margin projects are phased out and replaced by new projects which have been adjusted for higher input costs,” it added.