Our trip to the MRT
visitor center and along the alignment of half of the Sungai Buloh-Kajang
line was an eye opener as we got to see at eye level, the location of the
stations and how the line would run. This rare insight gave us an appreciation of
the route’s passage through potentially high traffic areas such as colleges, commercial
centers and retail malls. We see the project progressing smoothly once the land
acquisition issue is resolved as it is in the interest of all parties that the
MRT gets off the ground. We maintain a Trading Buy call on MMC as the news flow
on the company will continue to be strong.
An enlightening
visit. Last week, we joined a site visit hosted by MMC at one of the Klang
Valley Mass Rapid Transit (MRT) visitor centers in TTDI Plaza. The visit was enlightening
as the centre was replete with information relating to the rationale for the MRT,
its role in enhancing public transport in the Klang Valley as well as the
relevant facts and figures on the transport system. Our hosts were En Zamri
Hasan, GM Public Relations, KV MRT and En Maslan Othman, MMC’s Director of
Projects. After a briefing by En Maslan, we hopped on a bus which took us along
the MRT alignment from Sungai Buloh up to the point where the line would go
into an underground tunnel in Semantan. Along the way, we were briefed on the
location of the stations.
A well planned route.
Unlike the LRT which winds its way through some under-utilised stations, the
MRT’s route seems well planned indeed, as its stations will be close to locations
which will definitely generate heavy traffic such as SEGi College, HELP College,
the Section 16 commercial center and Sunway Giza. The appointments of En Zamri
and En Maslan on the MMC side of the MMC-Gamuda JV to handle the MRT job is a
plus point as both gentlemen were
previously instrumental in
building up Gas Malaysia to the successful company it is today. With an
estimated 80% of the contracts likely to be awarded by July, the MRT’s
progress seems to be picking up
steam, especially with the arrival of the tunnel boring machines (TBM) due by
year-end. We see a project of this nature
as unlikely to be derailed
regardless of the outcome of the upcoming General Election.
Maintain Trading BUY.
The emergence of a RM360m law suit filed by some prominent personalities
seeking compensation from the Double Track Railway MMC-Gamuda JV for contracts
not awarded may raise some questions but we do not see this action coming to a quick resolution. Rather, we believe the
case may not have an eventual impact on MMC’s bottomline. Meanwhile, there are
rumours that the Gas Malaysia IPO may be further delayed and as such, may not
meet its 2Q2012 listing deadline although we remain confident it should be
listed within 2012. As such, we maintain our Trading Buy call on MMC, with our
SOP fair value unchanged at RM3.70.
Source: OSK188
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