Construction-related stocks edge up

KUALA LUMPUR: CONSTRUCTION []-related stocks edged up in early trade on Wednesday, Sept 14 after HwangDBS Vickers Research said that the sector was on stronger footing than in 2008, and said it was insulated from the US/Europe woes.

At 9.22am, IJM Corp gained 13 sen to RM5.87, MRCB three sen to RM1.99, Gamuda one sen to RM2.91 while Lafarge Malayan Cement added 10 sen to RM6.98.

HwangDBS said the construction sector was domestic driven, fuelled by the ETP rollout.

'We compare the sector now to during the 2008 credit crunch, looking at: (i) new orders, (ii) earnings visibility, (iii) geographical exposure; (iv) balance sheet strength, and (v) valuations.

'Overall, we feel this domestic-oriented sector fuelled by the ETP will be less affected a US recession or Europe debt woes,' it said in a note Sept 14.

The research house said its analysis showed that earnings visibility was better now with the RM50 billion MRT project anchoring growth versus 2008/09 when the two stimulus packages benefited unlisted smaller contractors more.

It said its sector pick remains IJM, adding that Gamuda was at recession low.

MRCB and WCT are also large laggards, it said.

CIMB Research maintains Sell on WCT

KUALA LUMPUR: CIMB Equities Research said it is maintaining a Sell on WCT at RM2.54 at which it is trading at a FY12 price-to-earnings of 12.7 times and price-to-book value of 1.5 times.

It said on Monday, Sept 12 that it would likely to remain sellers for WCT as it sees no signs of a turnaround yet. The recent rebound has been weak.

'Its indicators are also looking weary despite falling from a high of RM3.18 in July. The MACD could be doing a rollover, which likely to indicate further selling ahead,' it said.

CIMB Research said traders should use any rebound towards the RM2.70-2.72 gap to sell into strength. Prices could potentially weaken towards RM2.35 next once the RM2.50 support gives way.