Company Update

16 Desember 2022

Construction Sector Update December 16, 2022

Indecisiveness as Risks Come Back Into Focus

Key Takeaways:
• Construction sector is one of the sectors that has been moving quiet slowly compared to other sectors during Covid-19 (as of Dec-22). We observe that there are 2 main things causing laggard in the construction sector: 1) economic fluctuation, which causes asset class changes, thus making investors to be more selective on finding companies with abundant cash reserves in the equity market; 2) the Fed's dovish stance, which leads to the rising interest rate and cost of funds.
• We are Neutral outlook for Construction sector in FY23F, on the back of: 1) single digit growth of new contract; 2) delayed payments by clients; 3) rising interest rate. However, we believe IKN sentiment could be a turnaround story in the futures to overcome the balance sheet construction players. Risks include: 1) Slower new contract achievement, burn rate; and 2) Hyperinflated material cost during economic slow-down.

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