Construction Sector - Eleven bidders for Samalaju port interim facilities OVERWEIGHT

- The Star  reported that 11 local companies have submitted bids for the construction of interim port facilities at the new Samalaju port in Bintulu division, Sarawak. Tenders for the package, which were called by Bintulu Port Holdings, closed last Wednesday. Among the bidders are those from Sarawak as well as Peninsular Malaysia.

- The contract value is estimated at about RM200mil,  and is scheduled to be completed within nine and twelve months. The interim facilities represent the second package under the proposed Samalaju Port. The first package – involving site clearing and earthworks – is due for completion within the next two months.

- The latest award represents another step forward towards the development of the new port – which is crucial to support growing transportation needs within the energyintensive Samalaju Industrial Park under SCORE. This comes after Bintulu Port had successfully won two court cases a week ago against Integrated Marine Works Sdn Bhd, which had earlier applied for interim court injunctions to stop the former or its agents from proceeding with a public tender for the construction of Samalaju Port.

- Taken together with a RM500mil facilitation fund provided by the federal government earlier this year to kick-start the project, we expect more newsflow to materialise on the project’s main packages – where construction of the 450ha port is slated to start early next year ahead of its full completion in 2016. 

- We expect Hock Seng Lee (HSL) to be in the mix of things for the main construction works at Samalaju Port. Apart from its niche in marine works, HSL possesses the prior track record of having completed the Tg.Manis deep sea fishing port worth ~RM300mil. 

- The encouraging development at Samalaju port is also timely ahead of the scheduled completion of Press Metal’s new aluminium smelter at Samalaju Industrial Park by end-3Q12 – giving rise to more certainty to its logistical requirements. From our channel checks, Press Metal would likely be among the early users of the interim facilities at Samalaju Port. 

- Broadly, the steady progress made for the proposed  Samalaju port re-affirms our positive view of an expected uptick in infrastructure newsflow within the SCORE region – as more energy-intensive investments start to take shape. 

- With roughly RM1.1bil in federal funding already in place for Sarawak early this year, we highlight four major jobs that would likely be rolled-out in 2012:- (i) 600MW Balingian coal-fired power plant (RM2.5bil); (ii) 500kV backbone transmission system (BunutKuching) [RM3bil]; (iii) balance of works for the Kuching Sewerage project (~RM1.7bil); and (iv) New Samalaju port (RM1bil).

- Our top picks for leverage to SCORE are Press Metal, HSL and Sarawak Cable. Rounding up our BUYs under this play are Bintulu Port, Naim Holdings and KKB Engineering.

Source: AmeSecurities