Construction - Five shortlisted for Langat 2?

-  Kinibiz reported that Pengurusan Aset Air Bhd (PAAB) has shortlisted five candidates for a 1,130 million litres/day (mld) water treatment plant (WTP) worth around RM1.2bil.

-  The shortlisted candidates are IJM Corp, Gamuda, UEM Construction Sdn Bhd, a JV among Salcon, MMC Corp and Ahmad Zaki Resources Bhd (AZRB), and Asia Baru Construction Sdn Bhd.

-  The project is part of the Langat 2 Water Supply Scheme, which in turn forms the Selangor leg of the Pahang-Selangor inter-state raw water transfer programme.

-  Thus far, we gather that construction progress on the Pahang end – consisting of the Kelau Dam, tunnelling works, water pumping station and associated piping works – are well underway.

-  If awarded, this would be the first package under Langat 2.

-  Bernama had recently quoted the Energy, Green Technology and Water Minister as saying that results of the tenders for Langat 2 are slated to be announced next month.

-  This is to achieve the target of completing this massive project by end-2016 – covering a working period of 45 months – to ensure adequate water supply in the Klang Valley until 2025, as the ongoing 11 water mitigation projects (RM726mil) are seen only as stop-gap measures.

-  Apart from the 1,130 mld WTP, we are unsure about the actual cost or whether components of the Langat 2 have changed over the last two to three years – where newsflow has been scant due to the protracted water imbroglio within Selangor’s water industry.

-  However, we believe the total cost of Langat 2 – earlier bandied about at up to RM5bil – would now be lower, as prices of hot-rolled coil (HRC) pipes that are to be used would cost much less at current quotes.

-  Regardless, we believe the execution of Langat 2 largely depends on the timing and more importantly, the political environment post-general election.

-  Zooming in on the pre-qualified contractors, we like IJM and Gamuda for their prior track records in undertaking water-related works. Further down, JAKS Resources could be in the fray for the piping components, for which it is already supplying the Pahang portion under a JV with IJM Corp.

-  Similarly, unlisted Loh&Loh Corp may be in the fray by virtue of its expertise as a water engineering specialist – having built ~half the dams in Malaysia.

Source: AmeSecurities