Construction Sector - MRT Corp awards four more jobs worth RM767mil OVERWEIGHT

- In a statement from its website, MRT Corp announced that it has awarded another four work packages under the Sg.Buloh-Kajang MRT project worth a combined RM767mil. (i) TSR Bina was awarded with package MSPR1 that entails the construction and completion of a multi-storey car park building, external as well as other associated works at the Sg.Buloh station. The contract is worth RM117mil. (ii) TSR Bina also emerged as the successful bidder for the Kajang Maintenance depot, administrative building, external and associated works (Package DPT2) worth RM213mil.(iii) Naim Engineering Sdn Bhd clinched package S4  that involves the construction and completion of three elevated stations and other associated works – i.e. Section 16, Pusat Bandar Damansara and Semantan. The total contract value is around RM208mil. (iv) Package S5 went to IJM Construction Sdn Bhd that involves the construction and completion of the Taman Bukit Ria, Taman Bukit Mewah, Leisure Mall and Plaza Pheonix. elevated stations for RM229mil.      

- With this award, we estimate that some 37 work packages worth a combined RM15.8bil (or ~79% of the entire SBK line’s initial costing) have been dished out. By our reckoning, another 17 are being evaluated while the remaining 31 have yet to be called. TSR’s win under Package MSPR1 (17 bidders) is the first of 9 multi-storey carpark packages to be awarded. The remaining eight packages will be out for tender soon. By the same token, the award of the Sg.Buloh depot (seven out of eight pre-qualified bumi contractors tendered) means that both the main depots for the SBK line have already been awarded. 

- The contracts won by Naim (S4) and IJM (S5) are the first out of eight elevated station packages, whereby the duo would be appointed as nominated sub-contractors for the main viaduct gateways that these stations would be located on. IJM had previously been awarded the main viaduct works under package v5 – i.e. from Maluri Portal to Plaza Pheonix.

- We make no changes to our earnings forecast for both Naim and IJM following their latest contracts, as it forms part of our new order book assumptions under the current financial year. However, we are slightly disappointed that WCT had missed out on the latest station works – where it had put in bids for two out of these three packages under the open category – the final outstanding contract being package s3 (The Curve, One Utama, TTDI). Out of the remaining six, three are under evaluation while the other three are out for tender. 

- As such, we expect 95% of the SBK line contracts to be awarded by year-end. The major contracts remaining include:- (i) the RM1.6bil rolling stock package; (ii) the remaining six stations; and (iii)the remaining six multi-storey car parks.

- We nevertheless believe investors should re-focus on long-steel players – whereby our channel checks indicate that over 500,000 tonnes of steel consumption are required for the SBK MRT line alone. Our top picks are Ann Joo Resources and Lion Industries.    

Source: AmeSecurities