THE BUZZ
According to the Business Times, MMC-Gamuda KVMRT JV is
buying six tunnel boring machines from Herrenknecht AG for RM360m for the Klang
Valley Mass Rapid Transit (KVMRT)
project. The world's largest maker of tunnelling machines had previously
supplied tunnel boring machines for the Stormwater Management and Road Tunnel (SMART) project.
OUR TAKE
Within expectations.
The announcement came within our expectations following the official award of
the RM8.3bn underground portion of the Sungai Buloh-Kajang (SBK) line last
Friday as we expect MMC-Gamuda to ensure timely completion of the entire said
portion by mid-2017. To recap, the underground package comprises the design and
construction of tunnels, 7 underground stations and other associated works in connection
for an approximate length of 9.5km traversing Semantan North Portal and Maluri South Portal.
First delivery
mid-2013. It takes 12 to 15 months to design and build the tunnel boring machines
and hence, we expect the first batch of delivery to come in by mid-2013. From our
checks with management, a total of 10 tunnel boring machines will be deployed
with the remaining 4 likely to be decided over the next few weeks. At first
glance, the average pricing of RM60m/machine may seem cheap vis-à-vis our
previous guidance of RM100m-RM200m each. Nonetheless, we understand that the
amount largely involves the core design of the machines to better suit the
karstic limestone geological profile in the city centre while about half of the parts (which we
believe have yet to be factored into the total costs) are expected to be
fabricated locally.
BUY. All in, we
are fairly positive on yet another milestone completed for the SBK line to ensure the
timely completion of the entire line by mid-2017, in which MMC-Gamuda would
then be entitled for its 6% management fee. Maintain BUY, with our FV unchanged
at RM4.57, based on SOP valuation.
Source: OSK188
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