Maintain OVERWEIGHT. We believe that our RM18bn domestic jobs win target for 2011 could likely be breached should the various projects under the ETP kick off faster than expected. Given the likelihood of an early General Election this year, we expect the momentum of news flow within the sector to accelerate.
Our top sector pick is Gamuda for its MRT exposure, with its Vietnam property launches and resolution of the water assets consolidation as the wild card. For the small caps, we like Ahmad Zaki. In view of the state elections which must be held by May, we continue to like the Sarawak theme and highlight sector laggard Naim Holdings. Investors may also consider looking at Iskandar construction plays, with Kim Lun as key proxy.
Below are the target price for selected stocks in construction sector.
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