On Tuesday, Singapore and Malaysia signed a legally binding bilateral agreement for the Singapore-Kuala Lumpur High Speed Rail (HSR) project.
According to a joint statement announced on Tuesday by both countries, a new bridge would be built between Singapore and Malaysia to accommodate the trains used for the HSR. The entire project is scheduled to come online by 2026.
Our FREE SGX stock pick!
As both Singapore and Malaysia prepare for construction to start on both sides of the Strait of Johor, what are the companies that might stand a chance of benefitting from this momentous project?
Although there are rumours that the main contractor for the project would be from China or Japan, both Singapore and Malaysia actually have no shortage of reputable contractors to build up the infrastructure needed.
From the North
From Malaysia, there are companies such as Gamuda Berhad (KLSE:5398.KL) and MMC Corporation Bhd (KLSE:2194.KL). The duo are two of the largest construction companies in the country. In fact, they are both involved in the current MRT (Mas Rapid Transit) projects taking place in Klang Valley, Malaysia. Therefore, they certainly have what it takes to be a part of the HSR project as well.
Another Malaysia-listed company that could win business from the HSR project is YTL Corporation Bhd (KLSE:4677.KL). The company owns one of the largest cement companies in Malaysia and supplies cement throughout the country and even to Singapore. For a cross-border project such as the HSR, having a track record of operations in both Malaysia and Singapore might be a benefit for YTL.
From the South
In the case of United Engineers, it is a key supplier to the construction industry. It supplies silica sand, equipment, and systems – such as fire protection systems – to the industry.
Meanwhile, ST Engineering, through its wide range of engineering products and services, could offer plenty of help for the whole project. For instance, the company has engineering solutions for in-tunnel wireless communications and products such as asphalt pavers that are likely to be needed during the construction of the HSR project.
The biggest winner
Although it is too early to know the identities of the companies that can truly benefit from the HSR project, the biggest winner would hopefully be the people of both Singapore and Malaysia. Hopefully, the HSR would allow everyone living in the two countries to enjoy better transportation. This can help improve the economies of Singapore and Malaysia and the lifestyles of their citizens.
For more investing analyses and important updates about the stock market, sign up to The Motley Fool Singapore's free weekly investing newsletter, Take Stock Singapore. Written by David Kuo, it can help you grow your wealth in the years ahead.
Like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.