All eyes down south

Maybank IB Research said the project would be “catalytic on many fronts”.

PETALING JAYA: Stocks with exposure to Johor emerge on investors’ radar, as the governments of Malaysia and Singapore are set to sign a memorandum of understanding (MoU) for the Johor-Singapore Special Economic Zone (SEZ) today.

While the location of the SEZ has not been firmed, analysts said it is likely to be in the Iskandar Malaysia region.

This would benefit companies with significant land bank in the state as well as construction and infrastructure players that could participate in the development of the SEZ.

The SEZ is also poised to amplify the demand for office space in the coming years, amid the relocation of businesses, benefiting property developers and real estate investment trusts (REITs).

In a media invitation, it was mentioned that the MoU signing ceremony for the SEZ will be held on Jan 11 in Johor Baru.

Economy Minister Rafizi Ramli and Singapore’s Trade and Industry Minister Gan Kim Yong are scheduled to ink the MoU.

The event will be witnessed by Prime Minister Datuk Seri Anwar Ibrahim and his Singaporean counterpart Lee Hsien Loong.

Bullish on the SEZ, Maybank Investment Bank (Maybank IB) Research said the project would be “catalytic on many fronts”.

It is expected to accelerate foreign direct investment momentum, especially by global multinational corporations who want to co-locate to both Singapore and Johor for strategic reasons.

It will also spur new infrastructure developments to support the higher economic activities ahead.

Maybank IB Research said in a note that potential beneficiaries of the SEZ would be sectors like property, construction, retail and utilities.

It highlighted that listed property players with a presence in Johor, especially in the Iskandar Malaysia region, have gained considerably in 2023.

“A developer with presence in Johor and which is in our existing ‘buy’ list is S P Setia Bhd. UEM Sunrise Bhd has one of the largest land bank in Iskandar Puteri besides Khazanah Nasional Bhd.

“In addition, plantation players like Genting Plantations Bhd also have ongoing property developments in Johor.

“Others property players with a presence in Johor are Sunway Bhd, IOI Properties Group Bhd, Scientex Bhd, Lagenda Properties Bhd, Kimlun Corp Bhd, KSL Holdings Bhd and Haily Group Bhd,” it said.

Maybank IB Research said the construction sector would also gain from an anticipated higher level of construction activities in Johor for infrastructure, industrial buildings, data centres and warehouses.

Contractors with presence in Johor are Sunway Construction Group Bhd, Ekovest Bhd and YTL Corp Bhd, among others.

In the retail sector, Maybank IB Research noted that a pedestrian overhead bridge to connect Komtar JBCC – an asset under Al-Salam REIT – to the upcoming Johor Baru-Singapore Rapid Transit System Link Bukit Chagar Station – would be ready in 2027.

This is expected to be the game changer to improve the outlook for Komtar JBCC mall.

“And in the utilities sector, Ranhill Utilities Bhd is a direct beneficiary of higher economic activities due to its exclusivity in providing source-to-tap water in Johor.

YTL Power International Bhd’s 18.87% equity stake in Ranhill on Nov 3, 2023 and a further 2.9% indirect stake on Nov 24 – bringing its total effective interest to 20.9% – will draw considerable interest as to YTL Group’s plans for Ranhill,” stated Maybank IB Research.

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