Construction Sector - Two more viaduct packages on the way NEUTRAL

- The Star reported that MRT Corp may award another two viaduct packages for the Sg.BulohKajang MRT project tomorrow. Both projects are estimated to be worth a combined RM2bil.

- MRT Corp would be meeting the Prime Minister on Thursday in view of the awarding of the elevated viaduct packages 2 and 3 that are supposed to be carried out under the open category.

- There are a total of eight viaduct packages. Five are to be awarded under the open category, with the remaining three under the bumi category.

- Viaduct 2 consists of the stretch from Kota Damansara-Sunway, and has a total length of 5.4km. It will run along three stations. Viaduct 3 comprises the Dataran Sunway-Section 16 route, with a total length of 6.26km and four stations.

- IJM (Package v5: Maluri Portal-Pheonix Plaza) and Sunway (Section 16-Semantan Portal) had earlier clinched viaduct contracts under the open category.   

- Ahmad Zaki Resources nailed Package v6 (Plaza Pheonix-Bandar Tun Hussein Onn Station) under the bumi category, while MTD-ACPI secured the Sg.Buloh depot under the open category.

- From a total of 11 contractors that were earlier pre-qualified for the viaduct packages under the open category, the remaining contractors that have yet to secure any jobs for the MRT project are Mudajaya Corp, MRCB, Gadang Engineering, Muhibbah Engineering – as well as unlisted outfits, Loh & Loh and Konsortium Putra Perdana Construction Worthy Builder JV.

- Meanwhile, the remaining viaduct package under the bumi package – Package v8: Taman Mesra-Kajang – is currently under the tendering stage.  While Package v2 and v3 are still very much an open field, we believe Naim Holdings may have a chance for Package v8.

- With the imminent award of Packages v2 & 3, we estimate that the total value of contracts awarded under the SBK MRT line would have reached close to RM16bil. This validates our earlier conviction that the MRT project would be fast-tracked by end-3Q12 – ahead of the earlier target of 85% by October 2012.

- Further out, the Kajang depot works and upcoming station packages (open category – 5; bumi category – 3) would be up for grabs next. We gather that WCT has bid for at least two station packages under the open category.

- We also expect investor expectations to slowly gravitate towards the suppliers of building materials, particularly for cement and steel. We would advocate Ann Joo Resources (steel), Lion Industries (steel), Lafarge Malayan Cement (cement), IJM Corp (via ICP: concrete-based products) and KimLun Corp (tunnel lining, segmental box girdles).

Source: AmeSecurities