Sarawak's Economic Takeoff: Companies That Could Benefit

In 2024, Malaysia's GDP is expected to grow by 4% to 5%. However, Sarawak's growth rate is projected to be higher, reaching 5% to 6%. With the Sarawak government allocating RM9 billion for development in its 2024 state budget, the economic outlook for Sarawak looks very promising. This budget increase signifies the Sarawak government's strong commitment to accelerating regional economic growth and development.

This substantial budget is likely to be used for various development projects, including infrastructure upgrades, support for local industries, and social welfare programs. These initiatives could attract more investment, create jobs, and improve the overall quality of life for the people of Sarawak.

For the stock market, this undoubtedly presents new opportunities. Here are a few areas that might benefit:

📍 Infrastructure Construction: With infrastructure upgrades and expansions, related construction and engineering companies could benefit. This could drive up their stock prices.

📍 Local Industries: The government might provide more support and incentives to promote the development of local industries, which could enhance the profitability of related companies and, in turn, boost their stock prices.

📍 Social Welfare: As social welfare programs are implemented, consumer purchasing power could increase, potentially driving up the stock prices of retail and consumer goods companies.

Here are some stocks related to Sarawak that could potentially benefit from Sarawak's economic takeoff:

📌 $CMSB / 2852 (CAHYA MATA SARAWAK BERHAD)

CMSB is a Sarawak-based conglomerate engaged in cement production, construction materials & trading, construction, road maintenance, property development, ICT, and financial services. This company has historical ties to the late Tun Taib, the former premier and Yang di-Pertuan Negeri Sarawak.

📌 $KKB / 9466 (KKB ENGINEERING BERHAD)

KKB specializes in steel fabrication for buildings and other products used in the construction sector. The company has also diversified into manufacturing steel pipes, pipe specials, and LPG cylinders. This expansion aligns well with the anticipated infrastructure boom in Sarawak, making KKB a likely beneficiary.

📌 $IBRACO / 5084 (IBRACO BERHAD)

IBRACO is involved in property development, construction, and quarry businesses in Sarawak. Like CMSB and KKB, IBRACO stands to gain from the increased infrastructure activities in the region.

📌 $ADVCON / 5281 (ADVANCECON HOLDINGS BERHAD)

ADVCON operates as a construction firm specializing in civil engineering and infrastructure projects, focusing on earthworks and related services. In 2023, Advancecon (Sarawak) Sdn Bhd secured a RM45.4 million earthworks contract from Petros Power Sendirian Berhad for the Miri Combined Cycle Gas Turbine (MCCGT) Power Plant Project. This positions ADVCON well for future projects in Sarawak.

📌 $ZECON / 7028 (ZECON BERHAD)

ZECON is involved in construction, water infrastructure, property development, and healthcare & hospital concessions. The company covers a wide range of sectors, including buildings, roads, bridges, and water infrastructure. On 15 March 2024, Zecon and Sarawak Digital Economy Corporation Berhad (SDEC) signed a Memorandum of Understanding to collaborate on the Kota Petra Masterplan, which includes developing an integrated urban area with smart city technologies.

📌 NAIM

Naim is a leading township developer in Sarawak with flagship developments in Miri, Kuching, and Bintulu. As a Class A Bumiputera Contractor with ISO 9001 certification, Naim has also expanded beyond Sarawak into Sabah, Peninsular Malaysia, and Fiji, working on various large-scale projects, including the MRT project in Klang Valley and road rehabilitation projects in Fiji.