Movement restriction order negative for construction and basic materials sectors — RHB Research

TheEdge Wed, Mar 18, 2020 11:47am - 3 years View Original

KUALA LUMPUR (March 18): Malaysia's movement restriction order is negative for the construction and basic materials sectors, said RHB Research.

In a note today, RHB Research said most of the companies will stop construction operations.

“However, they are still waiting for Master Builders to come up with a collective guidance.

“Due to the movement restriction, we understand that the supply chain will be affected,” it said.

Hence, in this environment, the research house said work progress is either halted or going to be very slow.

It said a small number of contractors are still operating at sites to carry out minimal works.

“At this juncture, it could turn challenging for most contractors to meet the scheduled completion.

“Unless they can accelerate their progress once the restriction ends, a delay will generally require them to write to clients, asking for time extension,” it said.

As for basic materials, RHB Research said it gathered that the cement and aluminium players have applied for exemptions in view of running production commitments, in addition to the hefty costs incurred in order to shut down and restart kilns and smelting facilities.

“In the meantime, we understand that Press Metal Aluminium Holdings Bhd’s smelting plant in Samalaju is allowed to operate, although its extrusion plants in Peninsular Malaysia are slated to close.

“Cahya Mata Sarawak Bhd’s (CMSB) operations are set to shut down, aside from associate OM Materials and Sacofa.

“Luxchem Corp Bhd has guided in maintaining its operations due to its deemed essential supply to glove makers. On the other hand, Kim Hin Industry Bhd’s operations would be shut down as directed,” it said.

At 11.19am, Press Metal fell 3.26% or 11 sen to RM3.28, CMSB lost 3.45% or 5 sen to RM1.40, Luxchem added 1.37% or 0.5 sen to 37 sen while Kim Hin was last traded at 85 sen.

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