THERE is significant progress in the Sarawak Corridor of Renewable Energy (Score) as more construction works have been rolled out and more detailed development plans have been made to ensure sustainable growth, Maybank Investment Bank Bhd (Maybank IB) said.
The development in Score would continue to create ample construction opportunities in the medium term, it added.
Maybank IB said construction players with track records in Sarawak would continue to benefit as more projects are dished out, especially before the Sarawak state election in mid-2016.
It remains “overweight” on the state’s construction sector, with Hock Seng Lee Bhd (HSL) being its top pick.
Score’s biggest beneficiary is still Cahya Mata Sarawak Bhd (CMS), it added.
“Having consistently won jobs in Score, HSL has built a strong outstanding construction order book of RM1.1 billion, which is 2.2x its trailing construction revenue. HSL would continue to benefit from the infrastructure works in Score and the urbanisation of Sarawak.
“The biggest beneficiary of Score is still CMS. Having significantly outperformed, our call on the stock now is a ‘hold’. We are positive on its long-term growth prospects and await the next catalyst,” Maybank IB said in a report yesterday after meeting with top executives of Sarawak’s Regional Corridor Development Authority (Recoda) recently.
Score has so far attracted RM50 billion worth of investments consisting of 32 projects, mainly in Samalaju.
“Albeit developments mainly focusing on Samalaju before this, we now see more detailed plans being drawn up to boost the other Score growth nodes.
“Recoda has proposed to develop specific industries in the other growth nodes, including a halal hub, shipbuilding, agriculture, aquaculture and tourism.
“Recoda also ensures balanced and sustainable growth across the state to avoid significant cost and wage inflation in a specific area. It has earmarked another heavy industrial area in Matadeng, Mukah, to avoid over-concentration of industrial activities in Samalaju.”
Maybank IB is positively surprised to learn that the construction of a new 2x300MW Balingian coal-fired power plant has finally kicked off. The earthworks and construction of access road are ongoing.
Sarawak has also approved the contract award for the main power plant. The entire construction is scheduled for completion in the fourth quarter of 2017.
The Balingian plant will be unlisted Sarawak Energy Bhd’s (SEB) second major power plant project after the recent completion of the 944MW Murum hydroelectric power plant.
The existing power plants in Sarawak include the 2,400MW Bakun hydroelectric plant owned by the federal government and the 270MW Mukah coal-fired power plant under SEB.