KUCHING: Public listed companies from Sarawak are poised to be on the radar of investors as they could come under the election-theme trading in the run up to the state’s upcoming polls.
Research firm AmResearch Sdn Bhd (AmResearch) in a report yesterday said beginning early next year, Sarawakian companies including Cahya Mata Sarawak Bhd (CMS), Sarawak Cable Bhd (Sarawak Cable), Hock Seng Lee Bhd (HSL), KKB Engineering Bhd (KKB) and Naim Holdings Bhd (Naim) will come under the election-theme trading in the lead up to the state election.
To note, the Sarawak state government recently tabled an election-driven budget for 2016 to the tune of RM8.04 billion.
The budget include a RM5.97 billion for development which will be utilised for roads construction, providing supply of treated water and for the agriculture sector.
The research firm also observed rural development received a higher allocation amounting to RM2.65 billion, a 13 per cent increase from 2015.
Additionally, AmResearch pointed out that Sarawak is also expected to benefit from the construction of the Pan Borneo Highway, whereby a total of 10 packages would be rolled out in phases.
Besides that, it noted between 12 and 15 consortia involving local and Peninsula participation have been pre-qualified for the highway construction.
AmResearch stressed that the Sarawak govenrnment requires local entities to have a 70 per cent equity lead in each of the consortia, with partners from the Peninsula for the construction of the highway.
The higway is expected to spur developments within and outside of the Sarawak Corridor of Renewable Energy (SCORE), it said.
With that, AmResearch opined CMS, HSL, KKB and Naim are all expected to be potential direct and indirect beneficiaries of the Pan Borneo Highway Sarawak project.
For the non-construction related companies, the research firm is upbeat on the timber sector and have ‘buys’ call for Jaya Tiasa Holdings Bhd and Ta Ann Holdings Bhd.
AmResearch believed they are expected to benefit from strong log prices and are prime beneficiaries of improving crude palm oil (CPO) prices.
In the meantime, the research firm is neutral on the prospects of Bintulu Port Holdings Bhd.
“The reasons were due to the uncertainty over the timing of the proposed tariff restructuring and the quantum and it believed that the share price has also priced in a potential six-month delay in the completion of the Samalaju Port,” it said.
Despite that, AmResearch is positive on the outlook of Sarawak listed firms with trading sentiment is expected to pick up towards the state election early next year.