HLIB: Buy Gamuda, WCT despite election risks

CAN HLIB research boleh pakai???

Business & Markets 2013
Written by Madiha Fuad of theedgemalaysia.com   
Tuesday, 22 January 2013 11:47

KUALA LUMPUR (Jan 22): Hong Leong IB Research has maintained its “overweight” call on the CONSTRUCTION [] sector despite election risks ahead.

Its top picks are GAMUDA BHD [] and WCT BHD [], with target prices of RM4.28 and RM2.88 respectively.

“Our preference is for the large cap liquid stocks as we expect these larger cap stocks to lead the recovery or narrowing of valuation gap while the mid/small cap companies are usually laggards,” said the research house in a note today.

HLIB Research added “the compression in construction P/E ratio does not do the sector justice as most construction companies have already successfully replenished their outstanding order book with an average run rate of 2.5x.”

It said that this implies high earnings visibility for the next 2-3 years.

“We believe that the latest sell-off was due to profit taking activities and the election risks have been largely priced in,”

HLIB Research expects government projects will be dished out after the general election and opines any additional contract wins will further expand the existing large order book of construction companies.