KUALA LUMPUR (Jan 9): Kimlun Corporation Bhd and KKB Engineering Bhd are expected to benefit from the Kuching Autonomous Rapid Transit (ART), said RHB Investment Bank Bhd (RHB IB) in a research note on Tuesday.

RHB IB has maintained its “overweight” rating on the construction sector and noted that the Kuching Urban Transportation System’s (KUTS) initial phase, encompassing the Kuching ART project which spans approximately 70 kilometres, includes three lines and is fully funded by the Sarawak government at an estimated cost of around RM6 billion.

The research house highlighted opportunities within the Kuching ART project’s Blue Line package 2 and Green Line package, affirming KKB Engineering’s involvement (buy; target price (TP): RM1.90).

In November 2023, the Blue Line package 1 contract worth RM569 million was awarded to a joint venture involving Ibraco Construction, China Railway Engineering Corporation (M) Sdn Bhd and Nanyang Tunnel Engineering.

Simultaneously, the Red Line package, valued at RM 943.3 million, was secured by a joint venture comprising Sri Datai Construction (Sarawak), JV Builders and CHEC Construction (M) Sdn Bhd.

Meanwhile, Kimlun had shown interest in the Kuching ART project and could engage in supplying precast components like segmental box girders, given that 20% of the 70-kilometre alignment of the project will be elevated, as highlighted by Sarawak Metro.

“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,” it said

KKB is supported by a 10.7% stake from Sarawak Economic Development Corporation (SEDC), the same entity that wholly owns Sarawak Metro, the project owner of Kuching ART.

Sarawak’s commitment to infrastructure growth is evident through the progress of the KUTS project, backed by RM 900 million in funding for 2024, amid a record-high RM9 billion development expenditure.

This supports various projects like highways and buildings, benefiting contractors, while potential risks include project delays and unforeseen cost reductions.

At the time of writing on Tuesday, shares in Kimlun traded half a sen or 0.61% lower to 82 sen, giving it a market capitalisation of RM289.77 million, while KKB Engineering Bhd was traded at RM1.58, with a market capitalisation of RM456.19 million.