Tuesday, 30 October 2012

Construction Sector - Three more MRT jobs awarded Overweight


- The Star reported that MRT Corp has awarded three more systems work packages worth a combined RM107mil.

- The first package went to the A.F.S Engineering (M) Sdn Bhd-ST Electronics LTd JV, which bagged the job to supply SCADA facilities for the Sg.Buloh-Kajang MRT line. The contract value is worth RM23mil.

- The second award was dished out to the Apex Communication Sdn Bhd-Johnson Controls (M) Sdn Bhd JV. The contract – worth RM41mil – was for the engineering, procurement, construction, testing and commissioning of the electronic access control system for the new line.

- Metronic Engineering Sdn Bhd clinched the third and final contract for the engineering, procurement, construction, testing and commissioning of building management system. The total value of works is RM43mil.

- Apart from this recent award, we note that Apex Communications had previously won three other jobs under the SBK MRT line. They include two station packages – S7 (Balakong and Taman Koperasi stations: RM105mil) and S8 (Saujana Impian, Bandar Kajang and Kajang stations: RM252mil) as well as the tele-communications work package (RM320mil) as part of the LG CNS consortium.

- We believe these three contracts highlighted above are all smaller packages under the SBK MRT systems work packages. The contract duration is for 82 months. 

- With this, we estimate that some 53 out of the 85 work packages worth a combined RM19.8bil have already been awarded. The balance 32 packages are likely to be awarded by year-end.

- As the contract hunt under the SBK MRT line draws to a close, investor interest would likely turn towards the suppliers of building materials. 

- Within this space, we favour Lafarge Malayan Cement, Ann Joo Resources, Lion Industries, KimLun Corp and IJM Corp (via ICP). 

- There could be more order book upside when better clarity emerges from the proposed second and third MRT lines. However, we expect a firm decision to only materialise after the elections.

Source: AmeSecurities

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