Thursday 5 July 2012

Construction Sector - 31 MRT tenders to be called by 3Q12 OVERWEIGHT


- Bernama reported MRT Corp as saying that 31 packages under the Sg.Buloh-Kajang MRT project would be called by 3Q12.

- MRT disclosed that it is set to award four packages, including the RM1.6bil rolling stock package, in the quarter. It was previously reported that three parties – namely Changchun Railways Vehicle Co Ltd, Siemens SMH Rail Consortium and CSR Zhuzhou Electric Locomotive Co Ltd – have put in bids.

- Based on our channel checks, the other three contracts could involve the last viaduct package for the MRT project (V8: Taman Mesra-Kajang), the Kajang depot and half of the eight elevated station packages. The remaining four station packages should subsequently be awarded by October.   

- MRT Corp had earlier revealed that it has formally awarded two work packages worth a combined RM1.5bil. Syarikat Muhibbah Perniagaan & Pembinaan was awarded the construction of the viaduct gateway from Sg.Buloh to Kota Damansara. The project is scheduled to be completed in 4Q14.

- TRC was appointed as the main contractor for the Sg.Buloh Depot (DPT1) under a contract worth RM460mil. The depot would be constructed on a 65ha-site at the Rubber Research Institute land. The project would entail the construction of a maintenance depot, operation & control buildings, external work and other associated works.

- More importantly, we remain convinced about the execution of the MRT project – whereby 95% of the entire 85 work packages should be awarded by year-end. To-date, 33 projects involving RM15.5bil (~78% of the entire project’s original estimate of RM20bil) worth of jobs have been awarded, while another 21 are in the process of being evaluated. 

- While competition for the remaining packages remains intense, we gather that Naim Holdings would stand a chance in either the Kajang Depot or package v8 under the bumi category. On the other hand, WCT is in for a shot for the station works under the open category – having submitted two bids worth a combined RM300mil-RM400mil.

- Likewise, we also expect investor expectations to slowly gravitate towards the suppliers of building materials, particularly with the multi-year supply prospects 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).

- As for MRT 2 (circle line) and 3 (radial: North-South), feasibility studies are nearing completion. Based on MRT Corp’s timeline, contracts for the underground portion could be dished out by end-2013, and targeted for completion within six years – i.e. 2020. This would be followed by the elevated works, which would be stretched right until 2030. But, any firm decision on both lines would only be known after the 13th General Election.  

Source: AmeSecurities

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