KUALA LUMPUR: Property and construction players are the biggest winners of the Johor-Singapore Special Economic Zone (JS-SEZ) which was kicked off on Jan 7, 2025.
"In our view, implementation of the JS -SEZ is positive for contractors and property developers. Potential stock plays on the JS-SEZ include Kimlun Corp Bhd, Sunway Construction Group Bhd (SunCon), Sunway Bhd, IOI Properties Group Bhd, UEM Sunrise Bhd and ITMAX System Bhd," Hong Leong Investment Bank Bhd (HLIB Research) said.
HLIB Research said contractors are the immediate beneficiaries of the JS-SEZ via construction jobs in the zone – e.g. requirements for the establishment of basic infrastructure (e.g. waste, water, electricity and roads), alongside industrial buildings and possible renewable energy opportunities.
It said Johor based contractors such as Kimlun and Ekovest Bhd could stand to benefit from the state's developmental boost.
Apart from that, the rollout of more data centres in Johor could potentially benefit SunCon which is currently undertaking two data centre jobs there totalling RM3.9 billion.
Furthermore, HLIB Research foresees a significant enhancement of people mobility between Johor and Singapore upon the rapid transit system (RTS) completion, alongside other measures such as passport free QR code travel.
It said coupled with the positive spill-overs from the JS-SEZ (as well as Forest City special financial zone) and better connectivity from the potential light rail transit (LRT) and autonomous rapid transit (ART), this should be a boon for Johor's property market.
"We also expect further developments on this urban mobility project to gain traction in 2025 given the pressing need for a dispersal network once the Johor Bahru-Singapore RTS is completed in Jan 2027, alongside connectivity to ensure the success of the JS-SEZ."
"While still up in the air, possible revival of the high-speed rail (HSR) would be a significant catalyst to the overall Johor theme," it added.
Meanwhile, CIMB Securities Sdn Bhd said it is generally positive about the signing of the JS-SEZ agreement, as it marks a significant step forward in implementing the special economic zone. However, it noted that some details, such as tax incentives and funding commitments, are still being finalised.
"Additionally, some investors may await the release of the government's blueprint for further clarity. "The JS-SEZ is expected to benefit the property, construction, and plantation sectors," it said in a note.
The firm expects that the SEZ could lift the prospects of property developers in Johor as increased movement of people and trade could stimulate demand for housing,particularly within Greater Johor Bahru.
Furthermore, it said based on the amount of investments pledged, the Malaysian government will create a federal-backed infrastructure fund to develop new rail and road links that support JS-SEZ's rapid development.
"By leveraging digitisation andIndustrialised Building System facilities, we believe that Gamuda Bhd, IJM Corp Bhd, and SunCon would be at the forefront of bids for more industrial buildings and high-tech facilities (including DCs), as the global realignment of trade and investments intensifies," it noted.
Furthermore, CIMB said the JS-SEZ is also expected to have medium-term spillover benefits for plantation companies with land exposure in Johor.
"This includes companies such asSD Guthrie Bhd, Kuala Lumpur Kepong Bhd (KLK), Genting Plantations Bhd, and Johor Plantations Group Bhd, which own plantation land in Johor that could benefit from the JS-SEZ through potential ventures into industrial park developments or land sales for property projects," it said.
RHB Investment Bank Bhd (RHB Research) believes the JS-SEZ has the potential to propel Johor to become the southern growth engine for the economy. It said the news flow on foreign direct investments (FDIs) from across the region will fuel Johor-centric plays.
"We remain positive on the broader market – with external volatility offset by domestic stability and bolstered byample liquidity, steady corporate earnings and attractive valuations.
"Top JS-SEZ stock ideas include UEM Sunrise Bhd , Sunway Bhd, Southern Cable Group Bhd, IJM and Dialog Bhd," it noted.
RHB Research also believes that the JS-SEZ is a compelling proposition on its own - with Johor offering a lower operating cost environment , accessto land, ample supply of skilled labour and adequate infrastructure toconnectivity coupled with Singapore's access to capital and technology.
It added that the corporate and personal income tax incentives, the committment by the establishment for a one-stop centre to facilitate processes, and establishmentof an infrastructure fund is icing on the cake for potential investors.
For the construction sector, the firm said the infrastructure fund – to be established by the Malaysian government – could spell opportunities in terms of road infrastructure jobs as JS-SEZ covers nine flagship zones.
For the property sector, it said the influx of FDIs, the opening of new offices by local and foreign financial institutions in Forest City, as well as the higher number of travellers from Singapore should have a strong positive spillover effect on the real estate sector.
"We expect more companies, workers and skilled labour to take advantage of the tax incentives and reside in Johor in the coming years.
"Major landowners in Iskandar Malaysia are set to benefit from the influx of FDI," it added.