1Q12’s domestic contracts soared 100% y-o-y and q-o-q to
RM13.3bn, boosted by the progressive rollout of contracts from the KV MRT SBK
line, which is expected to be completed by July 2017. We see the same factor
fuelling the jobs flow for the remainder of 2012, as 6 out of the total 8
packages for the elevated portion of the SBK line worth a combined RM5bn-RM6bn have
yet to be awarded. Maintain OVERWEIGHT
on the sector as the deluge of positive news in the next few months is likely
to fire up the sector this year, with Gamuda (BUY, FV: RM4.58) and KimLun (BUY,
FV: RM2.37) as our high conviction Top Buys.
Kicking off with a
bang. From a compilation of Bursa announcements, the total value of contracts
awarded in 1Q12 amounted to RM16.0bn, up by over 100% both q-o-q and y-oy.
These comprise RM13.0bn in local awards, with the Klang Valley My Rapid Transit
(KV MRT) Sungai Buloh-Kajang (SBK) line
making up a sizeable RM10.1bn while foreign contracts made up the
remaining RM2.9bn. Excluding the SBK
related jobs, local jobs made up RM2.9bn of the total, rising
4.9% y-o-y and 27.8% q-o-q, although their share of the total value of
contracts was down 43.6ppts y-o-y and 11.2ppts q-o-q to 49.5%, partly due to
Scomi Engineering clinching a RM2.6bn contract to develop a monorail system in Manaus
in Brazil with 3 consortium partners.
Benefitting from
KV MRT
SBK line. During 1Q12, a sizeable RM10.1bn worth of contracts was
dished out in relation to the KV MRT SBK line. Being the first of the 3 lines under
the massive KV MRT project, the SBK line is targeted to be fully operational by
mid-2017. To date, 27 works packages have been awarded to public listed and
unlisted contractors, while tenders and awards for the remaining 63 packages
are expected to be mostly completed by 4Q12. Some of the key packages that have
been awarded include Package v5 to IJM (TRADING BUY, FV: RM6.55), Package v6 to
AZRB (NEUTRAL, FV:RM0.91), supply of segmental box girders from v1 to v4 to
KimLun (BUY, FV: RM2.37), as well as the RM8.2bn underground portion which went
to MMC-Gamuda.
Source: OSK188
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