Malaysia’s Budget 2023: What stocks could be the beneficial?

Malaysia’s Budget 2023 was tabled for second reading on last Friday 07 Oct 2022. Finance Minister Tengku Zafrul Aziz announced an allocation of RM372.3b for Budget 2023 — RM272.3b for operating expenditure, RM95b for development expenditure, RM5b for Covid-19 fund, RM2b for contingency savings.

So now, the question is which sector will benefited? Or which counters might gain higher chances to be benefited from it?

Let's see~

E-WALLET: To offer one-off credit and the strengthening of cybersecurity can encourage and drive the use of E-wallet and cashless payment.

• RM400 million allocated to e-Pemula for one-off RM200 credit to e-wallets for those aged 19 to 20 years, and full-time students aged 21 and above.

• M40 e-Pemula Initiative: e-Wallet credit worth RM100 for the M40 group with annual income below RM100,000, to benefit 8 million individuals.

Stocks that could be benefited:
§  CIMB (1023) [TouchNGo]
§  AXIATA (6888) [BOOST]
§  REVENUE (0200) [cashless payment system]
§  GHLSYS (0021) [cashless payment system]

CONSTRUCTION:

• RM16.5bil for the transportation sector through main infrastructure projects, especially the Pan Borneo Highway, Gemas-Johor Baru Double Track project, ECRL, RTS Link and Central Spine Road. Here’re some contractors engaged in the projects previously, which might gain a higher opportunity for the new infrastructure projects.

Engaged in Pan Borneo Highway:
§  ZECON (7028)
§  KIMLUN (5171)
§  NAIM (5073)
§  GAMUDA (5398)
§  TRC (5054)
§  BPURI (5932)
§  WCT (9679)
§  MUDAJYA (5085)

Engaged in Gemas-Johor Baru Double Track:
§  PESTECH (5219)
§  WILLOW (0008)

Engaged in ECRL project:
§  NESTCON (0235)
§  IJM (3336)
§  ADVCON (5281)
§  HOHUP (5169)

Engaged in RTS link project:
§  EKOVEST (8877)
§  ECONBHD (5253)

Engaged in CENTRAL SPINE ROAD previously:
§  GADANG (9261)
§  PESONA (8311)

• RM11.4bil allocation set aside for the repair and maintenance of assets including Federal roads and government buildings to improve the quality of delivery and provide a conducive environment.

Engaged in Federal roads maintenance:
§  PRTASCO (5070)

• RM20mil will be allocated for motorsports tracks, with emphasis on promoting drag racing.

Engaged in building Formula 1 Racing Circuit:
§  WCT (9679)

• RM1.2 billion allocated to upgrade old school buildings and infrastructure, especially in Sabah and Sarawak; RM1.1 billion allocated for school repairs and maintenance.

• RM145 million allocation for maintenance, upgrading and construction of sports facilities.

• RM47mil for two additional field hospitals in Kluang and Kota Kinabalu to face any national disaster.

• A total of RM1.8 bil allocated for the construction of new clinics, hospitals and healthcare facilities. This includes Hospital Maran in Pahang, five new health clinics and a women and children’s wing for the Melaka Hospital Hospital. CT Scan service will be expanded which will specifically benefit those in the interiors of Sabah and Sarawak.

• RM367mil allocated for People's Housing Projects in urban areas, including new projects in Marang, Terengganu, and Arau, Perlis, which is set to benefit 12,400 people.

• Some 4,250 housing units worth RM358mil will be built under Rumah Mesra Rakyat program.

Properties:

Exemption of 75% of stamp duty on the sales and purchase agreements of properties priced between RM500,001 to RM1mil (signed by 31 December 2023). For instance, a 75% exemption on an RM750,000 property purchase will save the buyer up to RM15,000. This could pique the interest of middle-to-upper income first time home buyers as well as those who are looking to upgrade their property.

• In relation to real estate transfer documents and loan agreements for homes worth more than RM500,000 to RM1 million, the stamp duty exemption will be increased from 50% to 75% until Dec 31, 2023.

Some residential / commercial developer listed in Bursa Malaysia:
§  MAHSING (8583)
§  LBS (5789)
§  TAMBUN (5191)
§  UOADEV (5200)

Banking:

The greater access to financing for SME, business start-up, encourage of new home-buyers, infrastructure project… which could benefit the bank sectors with higher interest income.

• Guarantee limit of up to RM9 billion via Business Financing Guarantee Company to make it easier for SMEs to get financing.

• To encourage more young people to do business, RM305 million will be made available as a special loan facility for youths through SME Bank, TEKUN, MARA, BSN and Agrobank.

• For 2023, RM1.7 billion is to be made available as micro-loan funds and business facilities for the benefit of small businesses.

• Extension of 100% stamp duty exemption on loan restructuring or rescheduling agreement, or financing, until 2024

Some bank counters in Bursa:
§  MAYBANK (1155)
§  CIMB (1023)
§  RHBBANK (1066)

Cybersecurity:

• RM73 million to improve Malaysia's cybersecurity by strengthening monitoring, detection and reporting of threats, as well as building cyber forensic system capabilities.

Some counters with cybersecurity business in Bursa:
§  LGMS (0249)
§  SYSTECH (0050)
§  INFOTEC (0253)

Electronic Vehicle (EV):

• Exemption of import duties and excise taxes for imported completely built-up (CBU) electric vehicles extended until Dec 31, 2024.

• Manufacturers of EV charging equipment are given 100% income tax exemption on statutory income from assessment year 2023 to 2032 and 100% investment tax allowance.

Counters venturing into EV import:
§  CFM (8044)
§  EPMB (7773)

Counters venturing into EV charging:
§  YINSON (7293)
§  TENAGA (5347)

5G:

• Digital Nasional Bhd to expand 5G network nationwide to cover 70% of highly populated areas, infrastructure expenditure allocation worth RM1.3 billion in 2023

• Under Jendela Phase 2, the government plans to provide 100% Internet coverage in populated areas and fibre optic coverage to nine million premises nationwide by 2025, with an investment of RM8bil

• For 2023, the Jendela initiative has been allocated RM700mil to ensure digital connectivity in 47 industrial areas and almost 3,700 schools.

Some Telecom tower builder: 
§  OCK (0172)
§  BINACOM (0195)

Engaged in 5G roll out:
§  TM (4863)
§  DIGI (6947)
§  AXIATA (6888)

RENEWABLE ENERGY (RE):

• Extension of incentive application period for Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) until Dec 31, 2025, by increasing the incentive period to five years (from three years previously) for eligible green activities, including solar activities and Battery Energy Storage System

• Govt plans to introduce carbon tax and will study the feasibility of a carbon pricing mechanism. To support the implementation of this mechanism, the govt will provide RM10 million as matching grant to help SMEs prepare for carbon assessments.

Some counters with RE business:
§  SAMAIDEN (0223)
§  SLVEST (0215)
§  MFCB (3069)
§  PEKAT (0233)

Healthcare facilities:

The replace of equipment and build of new clinics, hospitals and healthcare facilities which enable to boost the demand for medical products such as medical beds and medical devices.

• RM420mil to repair dilapidated hospitals and clinics and to replace old equipment, with priority given to health facilities in rural Sabah and Sarawak.

MEDICAL BEDS:
§  LKL (0182)

MEDICAL DEVICES:
§  SCOMNET (0001)
§  K1 (0111)