Construction Sector - Faster roll-out of MRT projects OVERWEIGHT

- TheStar  reported over the weekend that the Gamuda-MMC JV –  the project delivery partner (PDP) for the Sg.Buloh-Kajang MRT project,  aims to expedite the roll-out of contracts for this line that is scheduled to be completed by July 2017.

- The target is to roll out a majority of the contracts at the start of 3Q12, instead of its original dateline of October.

- We gather that this could involve some 80% of the jobs that involve civil, station as well as depot works. This compares with Gamuda’s initial guidance that 85% of the contracts would be awarded by October.

- Thus far, some 27 out of a total of 90 work packages have been awarded for a total contract value of RM10.5bil. The major jobs that have been awarded include two elevated viaduct packages worth RM974mil (v6) and RM764mil (v5) to IJM and Ahmad Zaki Resources Bhd (AZRB), respectively.

- MRT Co also announced late last month that the MMC-Gamuda JV had emerged as the winner for the tunnelling portion of the SBK line worth ~RM8.2bil. The segmental box girdle package for certain sections worth around RM223mil was won by KimLun Corp.

- Near-term, we expect three major contracts of the SBK line to be doled out this month, followed by another two next month. From our channel checks on the ground, the three contracts this month may include packages v1, v2 and v7 for viaduct works worth ~RM1bil each. Apart from IJM, we expect Sunway and MRCB to be among the contenders while others in the fray under the bumi category include AZRB, TRC Synergy and Naim Holdings.

- Similarly, we also expect the award of the tunnel lining segment to be forthcoming, for which KimLun could once again emerge as a strong contender along with MTD ACPI and privately-held Hume Industries.

- As for the station works (8 packages), we fancy WCT to launch a strong bid for the five packages under the open category, while Pintaras Jaya could shape up as a contender for the piling/sub-structure works.

- We also envisage significant gains for the suppliers of building materials when construction works on the MRT project gathers momentum. We expect maiden orders to materialise as early as July 2012 when physical works swing into motion. Within this space, we like Ann Joo Resources (steel), Lion Industries (steel) and Lafarge Malayan Cement (cement).

- An additional two MRT lines costing a combined RM30bil would provide further impetus to the local construction industry, although a decision is unlikely to be forthcoming before the 13^th General Election.

Source: AmeSecurites