‘Sarawak constructors in sweet spot for major re-rating’

Researchers with Maybank Investment Bank Bhd (Maybank IB Research) believe Sarawak’s construction companies are on the right path towards a major rerating catalysed by growing job visibility and positive track records.


Listed Sarawak construction players with strong track records encompassing Cahya Mata Sarawak Bhd, Naim Holdings Bhd, Hock Seng Lee Bhd and KKB Engineering Bhd stand to clinch a portion of the growing construction works, it said.

More jobs will come from the construction of the Pan Borneo Highway, it added, as the project involves widening the present three-metre wide single-carriageway into a dual-carriageway.

Total length of the highway is 1,663km, comprising 936km in Sarawak and 727km in Sabah with an estimated cost of RM27 billion.

“We believe majority of the construction works will be dished out to Sarawak players,” it opined in a nation-wide note yesterday. “Currently, the Public Private Partnership Unit (UKAS) in the Prime Minister’s Department is spearheading the implementation.

“Under the UKAS initiative, the private sector is expected to fund the project first and get paid back upon completion. The Federal and State governments are finalising the details such as financing mechanism, site approval and land acquisitions.

“The Sarawak portion is planned to be built in stages under three phases and expected to complete in 2023, ahead of the initial target completion in 2025. The 40km portion (Tanjung Datu – Semantan, Phase 1) is expected to start construction in 3Q15 and to complete by end-2018.

“At the same time, the 740km from Sematan to Miri will begin construction in 3Q of 2016 and scheduled for completion by 1Q of 2023. The final portion from Tedungan to Merapok will begin in early 2018 and to complete in early 2023.”

Aside of the Pan Borneo Highway, Maybank IB Research observed that there is still massive infrastructure demand in Sarawak to support developments in Sarawak Corridor of Renewable Energy (SCORE) and to support both urbanizstion and rural developments.

In the growth nodes of SCORE, it said more basic infrastructure like roads and water systems are still required to accommodate the growing needs from the incoming investments.

“The state is requesting RM480 million under the 11th Malaysia Plan (11MP) for basic infrastructure development of the Samalaju Industrial Park including that for clean treated water supply, roads, social infrastructure like schools and health clinics, Battalion general operations force camps and fire stations,” it observed.

“Besides Samalaju, infrastructure at Tanjung Manis and Mukah, the other growth nodes of SCORE, is also still lacking.

“Sarawak Energy Bhd also has several power plants for developments in the pipeline. It is therefore vital for the construction of these new power plants to start soon as the existing energy supply has been mostly allocated to the industrial players.

“Therefore, access roads to the HEPs that are in the interior have to be built as well.”

The state government is also focused on building more new roads, upgrading existing sub-par roads and building more bridges to replace river ferries in order to improve connectivity to the interior part of Sarawak. Hence, it has also submitted several proposals for road and bridges construction to be included under the 11MP.

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