KUALA LUMPUR: The Bursa Malaysia Construction Index is expected to rise further as a result of the construction of flood mitigation projects in Malaysia, possibly exceeding the levels observed in 2017.
According to RHB Research, this is in addition to other high-profile projects like Penang Light Rail Transit (LRT) and Mass Rapid Transit (MRT) 3.
As a result, the research company has maintained its "Overweight" rating for the construction industry.
It is anticipated that the federal government will expedite the allocation of the RM11.8 billion set aside for flood mitigation projects nationwide in Budget 2024.
According to reports from Bank Negara Malaysia and the World Bank, if a flood happens once every 20 years, there may be a loss of up to 4.1 per cent of Malaysia's gross domestic product, and a 2.2 per cent increase in unemployment if proper adaptation measures aren't taken.
"With this in mind, we expect the federal government to expedite such projects in the coming months," RHB research said in a note.
The research firm said investable ideas in the flood mitigation space include Malaysian Resources Corp Bhd (MRCB) which has been shortlisted for a flood mitigation job in Selangor.
It said this is not a surprise given that MRCB is currently involved in the RM380 million Muara Sungai Pahang Phase 3 flood mitigation project.
"Aside from this, Kimlun Corp Bhd has expressed its intention to bid for flood mitigation projects which will most likely be in Johor given the group's prominence in the state, in our view.
"We also do not discount the possibility of Rohas Tecnic Bhd potentially clinching flood mitigation projects in the near future.
"This is premised on its involvement in the RM85 million job constructing pumping stations at two existing retention ponds and laying water pipelines to convey the water to the Semenyih Water Treatment Plant (WTP) intake," it said.
For East Malaysia, RHB research said Naim Holdings Bhd stands out as the main beneficiary for flood mitigation jobs in Sarawak as it was involved Phase 1 (stage 1) of the Kuching flood mitigation project (completed in 2010) for RM149 million.
It noted that the Phase 2 of the Kuching flood mitigation project was highlighted as one of the 33 high priority projects under Budget 2024.
The rollout of flood mitigation projects has so far seen Varia Bhd receiving a subcontract worth RM95 million from Kator Construction in Jan to undertake the Klang River flood mitigation project in Section 25, Shah Alam.
Separately, TRC Synergy Bhd secured a RM24 million job in Dec 2023 from the Department of Irrigation and Drainage to design and build a flood mitigation dam in Gombak, Selangor.
