Sarawak politically-linked stocks rally

PETALING JAYA: Sarawak-based politically-linked companies have
rallied strongly, with key stocks making new highs and gaining more
than 25% over the past two weeks since the elections.
Fund
managers have been realigning their portfolios by taking positions in
stocks deemed to be obvious beneficiaries over the next five years in
the resource-rich state following the strong Barisan Nasional win.
Since
May 6, the benchmark FBM KLCI has soared 16 points in buoyant trading.
Yesterday, the FBM KLCI closed 2.44 points higher at 1,769.16 on volume
of 2.11 billion shares. The FBM KLCI touched an all-time high of
1,788.43 on May 14.
Cahya Mata Sarawak Bhd (CMSB)
was the leader of the pack among the Sarawak-based stocks, which saw
gains over the two-week period. It gained 46% over this period to close
31 sen higher at RM5.11, also the counter's all-time high. The stock
touched an intraday high of RM5.15.
The counter continues to be actively traded, with some 2.83 million shares changing hands yesterday.
CMSB's market capitalisation has also ballooned to RM1.7bil due to its rising share price.
Analysts
said CMSB's earnings outlook remained bright over the long-term, due to
the company's being the direct proxy of Sarawak's growth story and in
large part being the sole supplier of cement in the state.
It
also has exposure to the extremely lucrative Sarawak Corridor of
Renewable Energy (SCORE) project through its 20% stake in OM Materials
Sarawak.
Moreover, the company has other businesses linked to
the state's development plans including in property, construction
materials, quarry and road maintenance.
Property developer Naim Holdings Bhd
also emerged as another hot favourite, with its share price rising
27.7% over the last two weeks to RM3.37 on volume of 1.13 million
shares as of yesterday.
Naim recently launched a mixed commercial, residential and leisure project in Bintulu with a gross development value of RM2bil.
Naim's 30% associate, Dayang Enterprise Holdings Bhd, has always been a hot favourite among investors and analysts, with many research houses recommending a “buy” on the stock.
Dayang's share price has also surged, closing eight sen higher yesterday at RM4.78 on volume of 3.73 million.
The stock touched an all-time high of RM4.95 on May 14.
Hong
Leong Research analysts have revised their forecasts to include RM4bil
(from RM2.5bil previously) of contract wins from an estimated RM10bil
of offshore hook-up and commissioning construction work for Dayang.
This
indicates a fair value range of between RM6 and RM9. They like this
Miri-based integrated oil and gas service provider due to higher
margins, skilled execution and valuation.
Infrastructure specialist Hock Seng Lee Bhd
has also appreciated 14% over the past two weeks. It closed yesterday
up five sen to RM1.83.The company has some 30 projects in-hand worth
close to RM2bil, with more than half being outstanding projects.