Source: www.sarawakscore.com.my
KUCHING: The research arm of Maybank IB Research (Maybank IB Research) has revealed that it is upbeat on significant progress in Sarawak Corridor of Renewable Energy (SCORE) as more construction works have since rolled out and more detailed development plans have been made to ensure sustainable growth.
According to Maybank IB Research, following a recent meeting with Regional Corridor Development Authority (RECODA), it was positively surprised with the significant progress in terms of physical ground works, growing investments and more detailed development plans for all growth nodes.
“Construction of another major power plant in Balingian has kicked off recently, which will be a core driver for SCORE to continue attracting investments.
“Infrastructure development at the growth nodes of SCORE including access roads to the power plants, a deep seaport, airport and water and telecommunication systems are also underway,” it observed.
The research arm noted that RECODA has also taken measured steps to ensure sustainable growth in SCORE including diversification of industries geographically and investing in human capital development.
Overall, it highlighted that the development in SCORE would continue to create ample construction opportunities in the medium term.
“Construction players with track record in Sarawak would continue to benefit as more construction projects are expected to be dished out, especially before the Sarawak state election in mid-2016,” the research arm projected.
As such, Maybank IB Research remained ‘overweight’ on Sarawak construction with Hock Seng Lee Bhd (HSL) as its ‘top pick’.
It noted that HSL is trading at 10-fold FY15 price earnings ratio (PER), close to its mean valuation and is a laggard among its peers.
“With its strong track record, HSL has continued to clinch projects from SCORE. It has won RM210 million worth of infrastructure works in SCORE year to date (YTD).
“Its outstanding orderbook is strong at RM1.1 billion, which translates into 2.2-fold its FY13 construction revenue,” the research arm noted.