Construction Sector - No bids yet for MRT rolling stocks OVERWEIGHT

- The Star quoted MRT Co as saying that none of the six pre-qualified companies shortlisted for the supply of rolling stocks for the Sg.Buloh-Kajang (SBK) MRT line have submitted bids.

- Under the original plan, the tendering period was supposed to have closed yesterday. However, the pre-qualified contractors had sent in a lot of questions requiring clarifications on the bidding requirements. This had subsequently compelled MRT Co to issue a letter of extension on April 26, indicating that the tendering period would now be extended for a month to June 11.

- Thus far, response from the international players has been muted. China’s CSR Zhuzhou – one of the international players – was seen to have a competitive edge over its rivals. CSR Zhuzhou had reportedly put in a sole bid for the SBK rolling stock package.

- Just last month, CSR Zhuzhou was reported to have clinched a contract worth RM530mil to supply 20 sets of six-car light rail vehicles for the Ampang line LRT extension program. CSR Zhuzhou is also in the midst of constructing a locomotive manufacturing facility in Perak that is to be completed in two years’ time. The initial investments in this facility are thought to be in the region of RM200mil.

- We have now learnt that CSR Zhuzhou is one of four parties that had submitted request for an extension of time for this job. Besides CSR Zhuzhou, the other five pre-qualified parties are Kawasaki Heavy Industries, Bombardier, Changchun Railway Vehicles Co, Siemens AG and Hyundai Rotem Co.

- Along with the systems works, the rolling stock package forms one of the two major proponents of the MRT project that has attracted international interest – as local expertise is still somewhat lacking.

- Rather, we believe investor interest would focus on the balance of works on the civil packages, where chances of local participation are considerably higher. They would include: (i) three viaduct packages under the open category – v2: Kota Damansara-Dataran Sunway, v3: Dataran Sunway-Section 16, and v8: Taman Mesra-Kajang); (ii) Kajang depot (bumi category); and (iii) segmental box girdles (southern section); and (iv)  elevated station works (bumi: five, open: three).

- While the remaining three viaduct packages remain an open affair, we believe WCT and IJM stand a chance for the station works and SBG southern portion packages – while Naim Holdings could emerge as a contender for the Kajang depot works.

- Similarly, we expect significant gains for suppliers of building materials – where physical construction works on the MRT project could gather momentum from July onwards. This should benefit Ann Joo Resources (steel), Lion Industries (steel), Lafarge Malayan Cement (cement) and KimLun Corp (tunnel lining). For the sub-structure works, Pintaras Jaya could be in the mix of things.

Source: AmeSecurities