Construction Sector - MRT project rolls on overweight

- TheSun reported that the Sg.Buloh-Kajang MRT project is now moving into the active phase of construction from preparatory work. Phase 1 – Sg.Buloh-Kajang – is scheduled to be ready by December 2016, followed by July 2017 for Phase 2 (Semantan-Kajang).    

- Just last month, MRT Corp awarded four work packages 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 RM117mi

(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.

- Thus far, 33 projects involving RM15.5bil (~78% of the entire project’s original estimate of RM20bil) worth of jobs have been awarded. Another 21 are in the process of being evaluated. Just two days ago, Naim confirmed that it had received a letter of acceptance for the RM208mil station sub-contracting works under package s4.   

- We maintain our view that 95% of the SBK line contracts will likely be awarded by year-end. The major contracts remaining include:- (i) Package v8 (Taman Mesra-Kajang); (ii) the RM1.6bil rolling stock package; (iii) the remaining six station packages; and (iii) the remaining six multi-storey car park packages.

- We gather that three parties have submitted bids to supply rolling stock – i.e. Changchun Railways Vehicle Co Ltd, Siemens SMH Rail Consortium and CSR Zhuzhou Electric Locomotive Co Ltd.

- While competition for the remaining packages remains intense, it was reported that Malaysian Resources Corp Bhd (MRCB) could be awarded the final viaduct package v8 sometime this week. On the other hand – we think WCT Bhd could still be in the running for the last remaining station jobs under the open category.

- 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 continue to 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