Construction - MRT Corp Hands Out Jobs Worth RM3.5bn

THE BUZZ - MRT Corp has handed out five more projects relating to the KV MRT SBK line totaling RM3.5bn. These are a RM1.4bn contract for the supply of 58 sets of four-car trains, a RM418m contract for depot equipment supply, a RM281m signaling contract, a RM459m job for power supply and the construction of the v8 viaduct from Taman Mesra to Kajang worth RM951m.

OUR TAKE

Within expectations. The announcement was as we expected as we had in our recent preview of Gamuda’s FY12 results highlighted that the remaining work packages for the SBK line look set to be awarded. Although the v8 viaduct package ended up with UEM Group subsidiary, UEM Construction, as opposed to our speculation that MRCB may potentially clinch the job, we are encouraged by the timeliness of the job awards. Hence, we continue to believe that the progress of work on the elevated portion of the SBK line remains largely on schedule for completion by end-2016 while the underground segment would be ready by mid-2017.

Update on SBK line. The handing out of the latestfive contracts bringMRT Corp’s total  number to 45 packages worth RM20bn. Attention is now likely to shift to the remaining three elevated station packages, which we believe would cost RM700m-RM800m in total, due to be awarded over the next two weeks.  

OVERWEIGHT. With the country’s general election now widely rumored to be called as early as November this year, we continue to see the possibility of the flow of contracts picking up post-election. The key infrastructure projects we see hogging the headlines post-election are the RM7bn West Coast Expressway, RM6bn Gemas-Johor Bahru Electrified Double Track, the RM2bn Kuala Lumpur Outer Ring Road, and the remaining two KV MRT lines, which we understand would cost RM30bn-RM40bn. These aside, we also see jobs potentially flowing from development zones such as RAPID in Pengerang, as well as foundation works on the Tun Razak Exchange. Overall, we are maintaining our OVERWEIGHT call on the construction sector, with Gamuda (BUY, FV: RM4.46), WCT (BUY, FV: RM3.36) and KimLun (BUY, FV: RM2.48) being our Top Buys.

Source: OSK