Figure 1: Bird-eye view of Unitrade Industries’ property.

Unitrade Industries Bhd, with a respectable history since 1979 as a wholesaler and distributor of building materials, has over 6,000 SKU in their building materials portfolio consisting of pipes, valves, fittings and accessories for M&E related works.

Unitrade had over 1,300 in terms of their active portfolio of customers, ranging from M&E contractors, building contractors, traders, manufacturers as well as retailers.

Entering 2024, we are greeted by a strong pipeline of infrastructure projects such as Penang LRT, Sabah-Sarawak Link Road, and LRT3 being reinstated according to Budget 2024. Not to mention the data centre development pipeline in Malaysia to an additional 1,400mw (approximately 10 times the capacity from now), will be very much creating a strong stream of demand for building materials for years to come.

For the welfare of people, there are also plans to roll out 6 flood mitigation projects for Johor, Selangor and Kelantan with a project value to be worth up to RM13 billion.

Unitrade is very well suited to support such demand with their capacity on hand.

Moreover, Unitrade had something unique that the other conventional building material wholesaler and distributor could not offer.

Figure 2: Signing of MOU between Unitrade and Invest Kedah Bhd.

Back in July 2023, Unitrade, through their wholly owned subsidiary Unitrade United Sdn Bhd, signed a MOU with Invest Kedah Bhd to develop modular housing systems for the centralised labour quarters (CLQs) in Kedah.

Aside from ESG requirements, and the saga caused by Andy Hall towards several EMS players in Malaysia, the CLQs helps companies with sizable employment headcount to comply with Workers’ Minimum Standards of Housing and Amenities Act 1990 (Act 446), failure to do so might cause a severance between the employer and their foreign customers.

This is, in fact, something beyond Kedah too.

In January 2024, Negeri Sembilan officially prohibits foreign workers from residing in residential areas, and they are mandated to relocate to commercial zones or CLQs by the end of the year.

Johor, had also ordered developers, contractors and manufacturers to relocate the works to CLQs within a span of 2 months. In such a short period of notice, many employers have no choice but to rely on companies such as Unitrade for their CLQs technical knowhow. At the same time, it is also beneficial to the core business of Unitrade to cross-sell their 6,000 SKUs.

As of now, Unitrade is only asking at a market capitalisation of RM453.0 million, with such promising prospects and existingly solid fundamentals, we think Unitrade is probably a stock you should include in your portfolio for 2024, to say the least.