Journey to Wealth
Cosntruction Sector - Pan Borneo highway upgrade OVERWEIGHT
- It has been reported that a planned upgrade of the PanBorneo highway is on the cards. The highway passes through Sematan, Kuching,Miri, Lawas in Sarawak before cutting throughvarious districts in Sabah including Sindumin, Beaufort, Kimanis, Kota Kinabaluand Tawau. For Sarawak, the 217km is between Sibu and Bintulu and another one runningfrom Bintulu to Miri (207km) would be given priority.
- The estimated cost of the works which connect the EastMalaysians states of Sabah and Sarawak is around RM423mil. Of this total, aninitial sum of RM100mil would be made available soon and shared equally betweenthe two states.
- These stretches have been given priority due to its highdaily usage by commercial and heavy vehicles rushing to Bintulu and other portswithin Sarawak's central region.
- Works Minister Datuk Seri Shaziman Mansor was reported assaying that the project would only involve upgrading works as opposed to a dual carriageway, as the current trafficvolume is only ~10,000 daily as opposed to ~20,000 vehicles under standard dualcarriageway requirements.
- This news supports our earlier conviction of rising jobprospects within Sarawak's SCORE region, where there is an increasingly urgentneed for basic infrastructure required to support the state's growing powerrequirements ' particularly within the Samalaju Industrial Park.
- This follows a series of Power Purchase Agreements (PPA)that state-utility firm Sarawak Energy Bhd (SEB) has inked. The earlyincumbents include OM Holdings, Asia Mineral Ltd and Press Metal.
- Prior to this, we understand that the Sarawak governmenthas already received a federal allocation to the tune of RM1.1bil ' including aRM500mil facilitation fund to kick start the development of a new port atSamalaju.
- We envisage at least four major infrastructure projectsthat are likely to be rolled out over the next few months:- (i) 600MW Balingiancoal-fired power plant (RM2.5bil); (ii) 500kV backbone transmission system(Bunut-Kuching) [RM3bil]; (iii) balanceof works for the Kuching Sewerage project (RM~RM1.7bil); and (iv) New Samalajuport (RM1bil).
- For strategic positioning within Sarawak's SCORE, werecommend investors to BUY Hock Seng Lee (HSL) and Sarawak Cable for theirrespective select strengths in marine/civil construction and transmissionline-related work.
- From an end-user standpoint, our pick is Press Metal whichis one of the four pioneer investors that have already secured long-term powersupply agreements with SEB. Phase 2 of Press Metal's plant ' when completedin stages by June next year ' would triplethe group's capacity to 360,000 tonnes and solidify its solid progression asthe largest integrated aluminium producer within ASEAN.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
