(Updates with closing share prices in sixth paragraph.)
Jan. 27 (Bloomberg) -- IJM Corp. rallied the most in four months in Kuala Lumpur trading after winning one of the first major construction contracts for a 48 billion-ringgit ($16 billion) mass rail network planned for Malaysia’s capital.
IJM, the Southeast Asian nation’s biggest builder by market value, rose as much as 6.8 percent to 5.82 ringgit, its steepest intraday gain since Sept. 28, after securing a 974 million- ringgit project from MRT Corp. Ahmad Zaki Resources Bhd. jumped as much as 28 percent to 95 sen after sealing a separate 764 million-ringgit job.
“This news should spark a re-rating of our top pick, IJM Corp.,” Sharizan Rosely, an analyst at CIMB Group Holdings Bhd., said in an e-mailed report today. He currently has a “trading buy” rating and price target of 6.43 ringgit.
The country is expecting a building boom this year with the government planning to spend 49.2 billion ringgit on roads and rail, Prime Minister Najib Razak said in his Oct. 7 budget. Construction of a 100-floor tower, a new financial district and a township covering an area of 1,060 hectares will also start this year in or around Kuala Lumpur, the premier said.
IJM was upgraded to “buy” from “hold” at Maybank-Kim Eng with an unchanged price target of 6.20 ringgit, Wong Chew Hann, an analyst, wrote in a report today.
The stock closed at 5.70 ringgit, up 4.6 percent. Ahmad Zaki gained 22 percent to 90 sen, its steepest gain since February 2000.
The Kuala Lumpur Construction Index of 43 builders climbed 2.6 percent, its biggest advance since Oct. 27. Gamuda Bhd., which is helping manage the mass rail project, climbed 1.9 percent to 3.77 ringgit, and Malaysian Resources Corp. added 3.3 percent to 2.18 ringgit.
“We are confident that with these significant contract awards, the MRT project implementation will gain momentum and continue to provide positive benefits to the economy,” MRT Corp. said in a statement.
The 156-kilometer (97-mile) railway will carry 2 million passengers a day with the first line scheduled for completion in 2016, the government said in a 2010 report. The project is part of a nationwide $444 billion private sector-led investment program being championed by Najib’s government to help the Southeast Asian nation meet its long-term aim of achieving high- income nation status by 2020.
Kumpulan Europlus Bhd., a builder 23 percent-owned by IJM, said yesterday it won state approval to privatize and build a 7.1 billion-ringgit highway along Peninsular Malaysia’s west coast. Europlus rose as much as 11 percent to 1.45 ringgit, before closing at 1.36 ringgit.
--Editors: Chan Tien Hin, Matthew Oakley
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