NEWSROOM
 
ECM Libra maintains underweight call on construction sector
by Surin Murugiah
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ECM Libra Investment Research has maintained its underweight recommendation on the construction sector in view of the negative outlook in the near term, due to escalating construction costs.

However, the research house said it still had buy calls on the construction stocks under its coverage, as share prices had corrected significantly year to date and very much at distressed level.

“We are cautiously calling an underweight now in view of negative outlook in the near term due to escalating construction costs. Further cost escalation induced by recent fuel price hike is in store for the next six months,” it said.

ECM Libra said earnings momentum of the stocks were still intact, due to high proportion of construction order books from the booming overseas market.

“Although there is bargain hunting opportunity now, we expect a downside bias to earnings and share price performance in the near term until price adjustments of building materials ease off,” it said.

The research house said IJM Corporation Bhd was its top pick with a target price of RM8.15, due to the company’s more diverse footprint in the Indian and Middle East construction sector.

ECM Libra also has buy calls on Gamuda Bhd and Sunway Holdings Bhd with target prices of RM2.85 and RM2.31, respectively.

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