Construction Sector - 3 bids submitted for MRT rolling stock award OVERWEIGHT

- MRT Corp said in a statement that it has received bids from three companies vying for the rolling stock contract for the 51km-long Sg.Buloh-Kajang (SBK) MRT line.

- Chief Executive Officer Datuk Azhar Abdul Hamid revealed that the companies are Changchun Railways Vehicle Co Ltd, Siemens SMH Rail Consortium and CSR Zhuzhou Electric Locomotive Co Ltd.

- Kawasaki Heavy Industries Rolling Stock Co and Bombardier Transportation did not submit bids, while Hyundai Rotem Co opted to pull out from the tender.

- MRT Corp further said that it expects the award of the tender to be dished out by late-July. We understand that the six companies mentioned above had earlier been pre-qualified for this package – where tenders closed on June 11^th  after a one-month extension.

- MRT Corp also said it was considering the possibility of standardizing the rolling stock for future MRT projects within the Klang Valley. We believe this could possibly mean that the eventual winner of the SBK line would be in a strong position to bid for more rolling stock packages for other new MRT lines being planned.

- We believe the chances of seeing Malaysian contractors winning MRT jobs is more confined to the civil portion, given the lack of local expertise.  But, we draw comfort that the momentum of contract awards should intensify going into 2H12.

- With the latest award for a pre-cast concrete tunnel segment lining job to Kim Lun Corp, we estimate that some ~RM13.7bil or close to 70% of the initial cost of RM20bil for the SBK line against a targeted 80% by early-3Q12.

- Further out, the balance of the major work packages 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 we opine that the remaining three viaduct packages remain an open affair, we believe WCT and IJM stands 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). For the sub-structure works, Pintaras Jaya could be in the mix of things.

- As for the balance of the tunnel lining work packages, we expect other MTD ACPI and  Hume Industries be in the reckoning together with Kim Lun.      

Source: AmeSecurities