Dated 5th of February 2021, Affin Hwang Investment Bank had mentioned that revival of mega infrastructure projects would pique interest in the construction sector – especially when the government has allocated up to RM69 billion in expenditure budget – an increase of 38% compared to year 2020.
Several key projects, such as East Coast Rail Link & Pan Borneo Highway are likely to get restarted in the second half of the year, hence, with the government’s pump-prime initiative, the construction sector is poised to provide positive return to investors.
From a chart perspective, this is likely to be true as the construction sector had bottomed in February and broken the strong resistance level recently. However, what are the companies that we can lookout for in this rally?
My personal stock pick would be AGESON BERHAD (AGES).
From AGES’s price chart movement, we could clearly tell that the company is in a consolidation pattern since early of September last year. Despite the recent revival of the construction sector, AGES has not shown any positive upward movement yet. Isn’t that weird?
In my opinion, I think AGES is a laggard behind the turnaround of construction sector.
The chart above shows the revenue and PBT of AGES after the new management had taken over the company. We can see that despite the revenue had decreased, profitability had increased substantially, why is that so?