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Thursday, October 31, 2013

Budget 2014: Budget winners and losers

Published: Saturday October 26, 2013 MYT 12:00:00 AM 
Updated: Saturday October 26, 2013 MYT 7:55:36 AM

THE Budget 2014 may put the spotlight on certain stocks, from e-services providerMyEg Services Bhd to sugar maker MSM Malaysia Holdings Bhd, as investors figure out the potential winners and losers.

A status quo on alcohol tax boosted shares in beermakers Guinness Anchor Bhd andCarlsberg Brewery Malaysia Bhd as the two stocks surged from their lowest levels since at least February.

Property counters will be bracing for impact from the increase in real property gains tax (RPGT).

Prime Minister Datuk Seri Najib Tun Razak in his fifth budget speech said the Government would implement the goods and services tax (GST) on April 1, 2015. That will give the market plenty of time to adjust to the new reality.

The implementation of the GST was widely expected, and some analysts believed MyEG, which is already working on a pilot project called Custom’s Tax Monitoring System, is the frontrunner to provide the collection system for the GST.

MyEG shares climbed five sen, or 2.3%, yesterday to close at a new high of RM2.25. The stock has risen 183% since May.

The implementation of the GST will enable the Government to broaden its tax base, while it cuts down on subsidies to rein in the country’s budget deficit.

Najib has already increased petrol and diesel prices at local pumps in September, and said yesterday the Government has decided to abolish the sugar subsidy effective today.

The surprise move may hurt beverage makers like Fraser & Neave Holdings Bhd, while a drop in sugar consumption will be negative for manufacturer MSM Malaysia Holdings Bhd.

While the Government has shown renewed resolve to cut subsidies, development spending continues to increase.

Public investment in 2014 is expected to reach RM106bil, while private investment will increase to RM189bil.

One of the projects identified in Najib’s speech is the 316km West Coast Highway from Banting, Selangor to Taiping, Perak. The project was awarded to Kumpulan Europlus Bhd in January last year.

Najib also highlighted several large oil and gas infrastructure projects in Sabah, as well as projects to upgrade airports in Sabah and Sarawak.

An interesting point is a plan to build 1,000 new telecommunications towers in Sabah and Sarawak over three years at a cost of RM1.5bil, as well as RM850mil for an undersea cable to boost Internet connection to the two states.

Sarawak-based KKB Engineering Bhd, one of the leading fabricators of transmission and communications towers in the country, and Sarawak Cable Bhd, a maker of power and telecoms cables, are seen as potential winners.

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