Construction - Taking the high ground (CIMB)

Results letdowns by certain contractors during the 3Q11 reporting period should not raise red flags as better quarters are in the offing. More importantly, the outlook for project awards starting 1H12 is good, driven by the roll-out of large scale jobs. We expect a continued improvement in construction margins, underpinned by progress billings and new contracts. Project flows are likely to pick up in 1H12 and trigger a rerating of the sector. Maintain Overweight. IJM Corp and WCT remain our top picks.