KUALA LUMPUR: Kimlun Corporation Bhd (KICB) and KKB Engineering Bhd are two cmpanies which RHB Research believes will benefit from new paclages which emerge from the Kuching Autonomous Rapid Transit (ART) project.
RHB Research said potential investment opportunities can be explored with KICB, which has previously expressed interest in engaging with the Kuching ART project.
Sarawak Metro has emphasised that 20 per cent of the 70km alignment for Kuching ART will be elevated, creating prospects for the group to provide precast components, including segmental box girders—products for which KICB is recognised.
"We also do not discount KKB'S participation in the Kuching ART project, particularly for fabrication related works for the hydrogen production plant at the Rembus depot.
KKB is backed by Sarawak Economic Development Corporation's (SEDC) 10.7 per cent stake in KKB.
Sarawak Metro, which is the project owner of Kuching ART, is a wholly-owned subsidiary of SEDC.
Funded entirely by the Sarawak government, the Kuching ART forms an integral part of the initial phase of the Kuching Urban Transportation System (KUTS) plan, valued at around RM6 billion.
Phase 1 of KUTS encompasses an approximately 70km route, incorporating three lines and 31 stations with dedicated lanes.
The Blue Line 2 and Green Line packages are yet to be awarded.
RHB Research said based on its observation, the Blue Line package 1 for the Kuching ART is estimated to cover approximately 20km, while package 2 (still pending award) is expected to be around 7km.
"Additionally, the Green Line (the longest line, at 30km) package is also not yet awarded to any party, and could likely be worth more than the contracts previously given," it said in a note.
In Nov 2023, Blue Line package 1 valued at RM569 million was awarded to a JV of Ibraco Construction, China Railway Engineering Corp (M), and Nanyang Tunnel Engineering.
The Red Line package worth RM943.3 million went to a JV of Sri Datai Construction (Sarawak), JV Builders, and CHEC Construction.
Overall, RHB Research said the progress of the KUTS project backed by RM900 million set aside under Sarawak's alternative funding for 2024, signifies Sarawak's continued drive to boost its infrastructure.
It added that developments like highways, buildings and industrial plants are supported by the state's record-high RM9 billion development expenditure for 2024, potentially benefitting contractors. Moving forward, the bank said key downside risks for the construction sector includes delays in the implementation of infrastructure projects in the state and unforeseeable cost cuts.
RHB Research has an "Overweight" rating on the construction sector.