Hot Stocks: YTL, IJM, Gamuda, MMC stir after KL-Sing rail news

The Edge Malaysia, February 20, 2013

By Ho Wah Foon

YTL Corporation Bhd, IJM Corporation Bhd, Gamuda Bhd and MMC Corporation Bhd stirred in early trades following the news that Malaysia and Singapore have agreed to build a high-speed rail (HSR) linking the city-state and Kuala Lumpur.

The travelling time will be about 90 minutes and the project, which could cost more than RM30 billion, is expected to be completed by 2020.

Both governments have also agreed to proceed with Phase 2 of the Rapid Transit System (RTS) feasibility studies to link Johor Bahru and Singapore. The project, if implemented, is expected to be completed by 2018.

At about 10.30 am today, YTL Corporation Bhd rose 4 sen or 2.5% to RM1.62 with trades of 4.75 million shares. IJM Corp added 9 sen or 1.8% to RM5.04 on 391,900 shares.

Gamuda climbed 1 sen to RM3.69 on 1.28 million shares while MMC edged up 2 sen to RM2.29 on 30,500 shares.

YTL, which has emerged to be the 10 most actively traded stock, was the first company to come out with the proposal on Singapore-KL link. It was responsible for the construction of the express rail link between KL Sentral and KLIA airport.

In a research note this morning, Hong Leong Investment Bank said:

“Both the rail projects are positive sentiment for the construction sector as it indicates potential order book replenishment opportunities for the construction players.

“We believe that the HSR, which spans more than 300km with speed of over 250km/hr, may cost about RM30 billion. Since this is a G2G project, we believe that both Malaysian and Singapore construction companies will be involved.”

It added that the potential Malaysian firms with rail-related track record that may benefit from these projects are YTL, IJM (target price: RM5.30), MMC and Gamuda (TP: RM4.28).