DESPITE the fact that the proposed Economic Transformation Programme (ETP) is not a pronouncement of the Government dishing out contracts it would pay for, analysts have highlighted the construction and property sectors as key beneficiaries.
Recall that the ETP requires the private sector to come up with most of the funding for the projects. However, it is still unclear if the Government will provide any kind of guarantee to the companies that are awarded the contracts.
In any event, the stocks that have benefited the most from the ETP seems to be Gamuda Bhd and MMC Corp Bhd, the two companies that had earlier submitted an ambitious plan to build a Mass Rapid Transit (MRT) project in the capital city.
That's because, as HwangDBS Vickers report puts it, the MRT has received a high level of commitment, increasing the project's approval. The research house adds that the RM36bil MRT project can double the order book of Gamuda and triple that of MMC's. It also says the construction sector as a whole will benefit from the MRT project, given its sheer size.
Meanwhile, CIMB Research points out: The MRT project is massive and represents the single largest contract in Malaysian history, beating the previous largest project, the RM12.5bil northern double-tracking, which is also being built by Gamuda-MMC.
CIMB notes that Gamuda has the expertise in tunnelling and that the tunnelling portion of the MRT project is worth RM13bil to RM14bil.
The research house also says that should the MRT project take off, there will be plenty of work to go around and other major players such as Malaysian Resources Corp Bhd (MRCB), IJM Land Bhd and WCT Bhd should also be able to ride on it.
OSK Research points out that of the 12 national key economic activities, the one on Greater KL had attracted the most interest as it had a scale model of KL and all the new proposed property developments, as well as more tangible projects such as the KL MRT and the river of life project, with high-level financial figures available. OSK adds that these projects are the most likely to kick off first.
The property sector has also been highlighted as another big winner.
This is on the basis that if the MRT project is carried out, it may lift the value of properties in central KL by improving underground connectivity and enhancing the shopping experience, analysts say.
Furthermore, the Greater KL plans for 10 million people living in the city by 2020 from 6 million currently. Of the additional residents, it is estimated that around 500,000 are expected to be expatriates or Malaysians returning from abroad.
All in, it is estimated that a million homes will have to be constructed to meet the requirements of an enlarged population base, notes CIMB.
HwangDBS Vickers points out that the Greater KL initiative should benefit owners of large land bank in KL that include Bolton Bhd, SP Setia Bhd and DNP Holdings Bhd.
The plan also includes the redevelopment of the RMAF base at Sungai Besi, Dataran Perdana, the Matrade development at Hartamas, the old Pudu Jail site and the redevelopment of Kampung Baru.
CIMB also singles out the High-Speed Rail project from KL to Singapore and Penang, which has been identified in the ETP as one of the projects that has partial or near commitment from a named investor.
The research house also highlights that the ETP mentioned Johor Baru as being listed as a geographic location that is a driver of economic activity.
If the High-Speed Rail project materialises, it could boost property prices in Kuala Lumpur significantly, as values are far behind Singapore's and travelling time between the two cities could be reduced to 2.4 hours. The rail project will also benefit property prices in Iskandar Malaysia as the proposed train will stop in Johor Baru before proceeding to Singapore.
What is surprising from the map of the proposed project is that phase two extends to Penang island, which is good news for the Penang property market too, CIMB says in a report.
It adds that while many developers have land in Johor, the biggest beneficiary will be UEM Land, due to its vast and strategic landbank in Iskandar.
Arguably, UEM Land's 10,000-acre land bank in Nusajaya is at the heart of Iskandar and the proposed MRT from Singapore will also pass through its project.
CIMB says other developers with a sizeable land bank in Johor include SP Setia, Mah Sing Bhd, UM Land Bhd, KSL Holdings Bhd, Bandar Raya Developments Bhd, Mulpha International Bhd, IJM Land, Tebrau Teguh Bhd, Plenitude Bhd and Daiman Development Bhd.
As for developers with exposure to high-end project in KL that may garner interest from Singaporean buyers, they include Eastern & Oriental Bhd, Sunrise Bhd, UM Land, Bandar Raya, Mah Sing and Glomac Bhd, CIMB says.
Genting Bhd and Genting Malaysia Bhd can also gain if Singaporeans choose to take the high-speed train ride here to a casino that they needn't pay fees to enter, unlike the two integrated resorts in Singapore, analysts say.
Building materials companies such as Ann Joo Resources Bhd and Malaysia Steel Works Bhd, and Southern Steel Bhd as well as the big cement players such as YTL Cement Bhd, Tasek Corp Bhd and Lafarge Malayan Cement Bhd may also gain.
A head of research at a broking house adds that other beneficiaries may include education stocks for private schools such as Help International Corp Bhd, PIE Industrial Bhd for the focus on the electronics and electrical sector, MyEG Services Bhd for the broadband and electronic government push and ETI Tech Corp Bhd for the focus on renewable energy.
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