SIME - Plantations on an extendable rally

Plantation sector
Upgrade to overweight: We view that there may be impetus for crude palm oil (CPO) prices to run further in coming months. The key drivers for prices are: (i) strong exports which are already up 6.4% year-to-date (YTD); (ii) weak production that is only up 1.6% YTD; (iii) upcoming festive season demand may see CPO stock levels tumble; and (iv) the soyabean market faces a tightening in supplies due to China's demand. Just to illustrate the severity of point (iv), 9MCY10 imports by China already make up some 94% of full-year 2009 imports.

For 2011, we see that CPO prices have a good potential to average at RM2,700 per tonne. It might appear low compared with current CPO prices, but let us not forget that CPO prices are volatile. We view that prices will be stronger in 4Q10/1H11, given the factors mentioned above, but then may calm down in the later part of the year as supplies of other oil seeds may recover, cooling demand for palm oil. Of course, this is assuming there are no weather shocks next year affecting palm oil or other major oil seeds.

The picture we paint appears to make for another CPO price rally, however, there are always risks we have to watch out for: (i) a strong South American crop may balance out soya market supplies; (ii) a drop-off in exports due to overstocking in countries like China; (iii) strong production of other oil seeds may reduce the need for palm oil as a replacement; and (iv) structural changes like import duties or quotas that may affect exports.

Following our series of earnings and call upgrades for the stocks under our coverage we are now formalising our 'overweight' view on the sector. We note that Sime Darby (YTD -1.2%) and IOI (YTD +6.2%) particularly have been laggards compared with the FBM KLCI (YTD +17.3%). KLK (YTD + 17.6%) and Genting Plantations (YTD +36.5%), on the other hand, have been stronger YTD. Hence, we view more upside potential for Sime Darby and IOI, citing them as the top picks for the sector. ' ECM Libra Investment Research, Oct 28.

This article appeared in The Edge Financial Daily, October 29, 2010.

On the fast track

Several companies made presentations to the National Key Economic Area (NKEA) lab about three months ago on the Kuala Lumpur-Singapore high-speed train project, industry sources say.

Among them were YTL Corp Bhd and Hartasuma Sdn Bhd (4677), which was said to be partnering a Chinese state-owned firm.

Hartasuma, a Class "A" Bumiputera contractor, is a member of Ara Group, founded by Datuk Aisamar Kadil Mydin Syed Marikiah and Tan Sri Ravindran Menon, director and executive director of Subang SkyPark Sdn Bhd respectively.

Its track record includes repair and overhaul of passenger coaches for KTM Bhd and civil works (Kuala Kubu Baru-Tanjung Malim Halt) for the Rawang-Ipoh electrified double tracks.

Business Times understands that some of the companies have proposed to undertake the high-speed rail project for between RM8 billion and RM14 billion.
A government source said the project could be worth RM10 billion to RM12 billion and that it would take five to eight years to complete as it will cover 300km.

The source said that cost would depend on the type of technology deployed, whether it is magnetic levitation (maglev) or conventional, and how the tracks are aligned.

Maglev will cost more than conventional, but requires less maintenance, is safer and faster. The system also uses more electronics and essentially involves "non-contact electromagnetic levitation".

"If the alignment is built along the coastal road, then it would involve a lot of land acquisition and this would add to the cost," he said.

The source added that the project would depend on a study by the Treasury, the Performance and Delivery Unit (Pemandu) and other government agencies.

It is believed that Pemandu, which is leading the NKEA lab, has invited officials from the Ministry of Transport, the Land Public Transport Commission (Spad) and City Hall to attend briefings held separately by the companies.

The high-speed train project was mooted by YTL in 2006. It had proposed to undertake the project for RM9 billion, partnering Germany's Siemens, a global expert in high-speed rail technology.

The YTL proposal, however, was shot down because of the high cost involved.

Malaysia is mulling over a high-speed rail linking Kuala Lumpur and Singapore that will cut travel time between the two cities to 90 minutes.

Plans would require the approval of Singapore, which has expressed its interest in the project. However, the government has not given a firm approval, the source said.

Read more: On the fast track

Petronas Chem IPO to raise up to $4.2 bln

Written by Reuters Tuesday, 26 October 2010 12:16

KUALA LUMPUR: Malaysia's Petronas Chemicals could raise as much as $4.2 billion in its IPO, the largest ever in Southeast Asia, with the unit of state oil giant Petronas setting a price range for the share issue, according to Reuters on Tuesday, Oct 26.

A term sheet obtained by Reuters showed the initial public offering will offer a maximum of 2.5 billion shares at a price range of 4.50-5.20 ringgit per share. At the high end of 5.20 ringgit ($1.68), the IPO will raise $4.2 billion.

Petronas Chemicals' IPO comes as strong liquidity, low interest rates and comparatively more attractive returns are driving a wave of multi-billion offerings in Asia.

AIA, the Asian life insurance arm of AIG, last week sold $17.9 billion in its Hong Kong float, becoming the world's third largest IPO.

And Singapore wealth fund GIC's logistics unit Global Logistic PROPERTIES [] last week listed after a $3 billion IPO.

The term sheet breaks the IPO down as follows: up to 2.2 billion shares for institutional investors and 293 million retail shares. An over-allotment option, or greenshoe, of 372 million shares has also been made available.

The Employees Provident Fund (EPF) and Kumpulan Wang Persaraan, which are both pension funds, will be cornerstone investors and have undertaken to take up 445 million shares at the final IPO price.

There is a six-month lock-up period for Petronas, the selling shareholder, and the cornerstone investors.

At 5.20 ringgit per share, Petronas Chemicals' price-to-earnings comes in at 15.5 times 2011 earnings and 12.9 times 2012 earnings. The closest peer, Thailand's PTT Chemicals, trades at 20 times forward PE, according to Thomson One data.

The market was divided about the attractiveness of the company's valuations, citing the inherent volatility of the petrochemicals business.

However, some analysts said that the "Petronas premium" -- the added value of having state oil firm Petronas as a parent company -- justified the premium.

Petronas Chemicals' IPO will exceed that of Maxis' last year, which raised $3.3 billion. It will also be bigger than the $647 million being raised by Malaysia Marine and Heavy Engineering, another Petronas-linked vehicle. - Reuters

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Broker way to ride on bull run

By YVONNE TAN yvonne@thestar.com.my

PETALING JAYA: The market has “come back to life” and one way to ride on this rejuvenation is by buying stocks of stock-broking houses, says research house Credit Suisse’s Malaysian unit. However, not all analysts share its view.

“The blue chip way to play it is through Bursa Malaysia Bhd given that 60% to 70% of its top-line is directly attributable to volume-related activities.

“Alternatively, you might want to take a look at TA Enterprise Bhd or OSK Holdings Bhd, the two more liquid brokers,” Credit Suisse told its clients in a note on Thursday.

Manulife Asset Management (M) Sdn Bhd chief executive officer Jason Chong pointed out that the current interest in the stock market was largely being fuelled by institutional buying.

“Technically, we are in a bull run but listed brokers rely on retail participation.

“Thus far, that has been lacking so will they (stock-broking houses) do exceptionally well, especially in the shorter term? I’m not sure about that,” he said.

“Normally, retail participation only comes in the last leg, I believe we’re at the initial stages (of a bull run),” Areca Capital Sdn Bhd chief executive officer Danny Wong said.

Retailers normally let institutions take the lead, he added.

Trading values at Bursa Malaysia have been growing over the past few months as markets flushed with cash chase after stocks with growth potential.

In July, daily average trading values stood at below RM1.1bil.

In August, this grew to RM1.3bil, expanding in September to RM1.5bil and this month, RM1.7bil, according to Bloomberg data.

Daily average trading volumes have also ballooned to the current 1.3 billion shares from below the 1-billion mark months ago.

Year-to-date, the benchmark FTSE Bursa Malaysia KL Composite Index is up about 17%.

“There is plenty of action among second-line stocks. If liquidity and pre-election confidence grows, this could sustain due to low valuation,” Credit Suisse said in its note.

“Given that 62% of the 936 stocks listed are trading below book value, we believe this market activity is sustainable,” it said.

At the close yesterday, Bursa was up 7 sen to RM8.24 , TA was flat at 70 sen while OSK added 4 sen to RM1.38.

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Sime Darby: Buy, target price RM11.80

Friday, October 22, 2010, 04.59 AM

ECM Libra Investment Research has upgraded its call on Sime Darby Bhd(4197) to "buy", from "hold", and raised its target price by more than 50 per cent to RM11.80, mainly driven by its plantation business.

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WCT lands two projects worth RM1.49b in Qatar and Sabah

Written by Surin Murugiah Wednesday, 20 October 2010 18:48
KUALA LUMPUR: WCT BHD [] has secured two separate contracts in Qatar and Malaysia worth a total of approximately RM1.49 billion.

In a filing to Bursa Malaysia on Wednesday, Oct 20, WCT said it had been awarded a contract by the government of Qatar to build and maintain a government administrative building in Doha for a lump sum equivalent to RM1.36 billion.

It said the works for this project were expected to be completed by April 2013.

In a separate announcement, WCT said it had accepted a contract from the Public Works Department Malaysia to design, build and maintain the Tuaran Hospital in Sabah for RM127.8 million.

It said the project was expected to be completed on May 1, 2013.

WCT said the two projects would not have any material impact on its earnings for the financial year ending Dec 31, 2010 but were expected to contribute positively to its future earnings.

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Major projects under Budget 2011 will drive demand for building materials

By IZWAN IDRIS izwan@thestar.com.my

PETALING JAYA: The construction sector emerged as the clear winner from Budget 2011 but a rally in the past months means stocks valuation are no longer cheap and the risk is higher.

The smart money call is on the building material suppliers, from steel makers to cement producers, analysts said.

“We expect more positive news flow in the coming months for the construction sector,” MIDF Research said in a note yesterday, predicting a slew of project roll-outs and tender awards in the coming months.

While the question of who will bag what remained unanswered, analysts said the sheer number of upcoming construction jobs out there would drive up demand for building materials.

Malaysia Iron and Steel Indsutry Federation (MISIF) president Chow Chong Long said there was enough capacity in the country to meet the anticipated increase in demand for construction steel bars and other products.

“We don’t foresee steel shortages if the construction projects listed in Budget 2011 are implemented next year,” he said in a SMS reply to a StarBiz query.

He noted that steel factories in the country were currently running at about half their installed capacity.

“MISIF does not expect steel demand to increase until the middle of next year as it usually takes up to six months for projects to take off from the date they are awarded,” Chow said.

On Friday, Prime Minister Najib Tun Razak announced that a number of multi-billion ringgit projects would start construction next year.

This includes the RM40bil mass rapid transit system in Kuala Lumpur, six highways, the RM26bil KL International Financial District and a plan for an iconic 100-storey tower by Permodalan Nasional Bhd, on top of smaller builds such as rural roads, schools and hospitals.

Most of the big projects were already made known prior to last Friday because they were part of the 10th Malaysia Plan, or the Economic Transformation Programme.

Hence, it was not really a big surprise for the market when the projects were announced in the budget.

“These construction and infrastructure projects would require a lot of steel bars and cement,” BIMB Securities head of research Rosnani Rasul said yesterday.

“We are comfortable to retain our forecast 7% growth in cement demand in 2011,” she added. Among potential beneficiaries are Lafarge Malayan Cement Bhd and YTL Cement Bhd.

Shares in bigger construction groups Gamuda Bhd, IJM Corp Bhd, MMC Corp Bhd and WCT Bhd declined yesterday, largely in sympathy with the FTSE Bursa Malaysia KL Composite Index’s (FBM KLCI) 9.16 points drop yesterday to 1,480.70 points.

The few big gainers yesterday included Ann Joo Resources Bhd, a steel maker rated as a “buy” by AmResearch and BIMB Securities.

“We expect significant gains for the steel sector, which is a cheaper entry for leverage to the Malaysian infrastructure theme,” AmResearch analyst Mak Hoy Ken wrote yesterday.

Mak’s top pick for the steel sector is Ann Joo. The stock yesterday climbed 14 sen, or 4.7%. to RM3.12 – its highest level since January.

Specialisation may help smaller firms stand out from the pack and MIDF Research sees pre-cast concrete manufacturer MTD ACPI Engineering Bhd as a potential beneficiary.

In the budget, the Government forecast its development expenditure would drop 9% to RM49.2bil in 2011, and the slack in spending to be taken up by the private sector.

One of the key aspects of infrastructure development hinges on the success of the implementation of public-private partnership (PPP) projects.

But given the lack of clear details, “much (uncertainty) still lingers on issues like execution of these projects,’’ Inter-Pacific Research head Anthony Dass noted in his report yesterday.

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Govt to spend RM100m on Karambunai resort

By Sharen Kaur

DEVELOPER and resort operator Karambunai Corp Bhd (3115) will build an integrated eco-tourism resort (IR) in Kota Kinabalu, Sabah, for over RM3 billion.

In unveiling the 2011 Budget yesterday, Prime Minister Datuk Seri Najib Tun Razak said the government will allocate RM100 million to part-finance the development.

Najib said the project will start next year.

The IR project is now under planning and it will take about five years to complete.

It is learnt that the project, which may look like Singapore's Marina Bay Sands, will be developed over 200ha of land in the Karambunai peninsula.


Karambunai Corp has 600ha of land in the Karambunai peninsula. It has since 1997 used about 130ha to build the five-star Nexus Resort Karambunai, Nexus Golf Resort Karambunai and 200-odd units of luxury beachfront villas.

Company sources said the IR project will have four- and five-star hotels and resorts, waterfront properties and an entertainment centre.

It may also include a museum, cultural villages, a cable car and a theme park similar to the famed Disneyland.

"We have the support of the state-government, which is very pro-active in eco-tourism projects in Sabah. International experts will be roped in for the IR project to ensure that it attracts locals and foreigners, targeting a boost in tourism," one source said.

Sabah-based Karambunai Corp is linked to NagaCorp Ltd, which is listed in Hong Kong and operates a casino in Cambodia.

The two companies' common shareholder is Tan Sri Dr Chen Lip Keong, who founded NagaCorp and serves as its chief executive officer. Chen is president of Karambunai Corp.

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Multi-billion projects in the pipeline

PETALING JAYA: The Government has earmarked several multi-billion projects that will see the construction of several highways, a mass rapid transit (MRT) system, and the Kuala Lumpur International Financial District (KLIFD) amongst others, to be kicked off next year.

Generally, the planned development is well-received by the construction sector.

Prime Minister Datuk Seri Najib Tun Razak yesterday said in the Budget 2011 speech that under the public-private partnership (PPP) initiatives, several projects under the 10th Malaysia Plan would be implemented next year through private investment of RM12.5bil.

The Government had allocated RM1bil from the facilitation fund.

Among the PPP projects mentioned are the construction of several highways and 300-megawatt combined-cycle gas power plant in Kimanis, Sabah.

Others are the International Islamic University Malaysia Teaching Hospital, the Women and Children’s Hospital, Integrated Health Research Institute Complex in Kuala Lumpur and Academic Medical Centre.

Additionally, high-impact strategic developments were also identified.

The first is RM26bil KLIFD where the Government is prepared to consider special incentive packages to attract investors to the KLIFD.

Next, is the MRT in Greater KL with an estimated private investment of RM40bil which is expected to be completed by 2020.

Also, the mixed-development of the Malaysian Rubber Board (MRB) land in Sungai Buloh to be undertaken by the Employees Provident Fund (EPF).

This is to be completed by 2025 and the development is estimated at RM10bil.

Finally is the development of another landmark building, a RM5bil 100-storey tower, Warisan Merdeka to be developed by Permodalan Nasional to be completed by 2020.

Master Builders Association of Malaysia (MBAM) was appreciative that the Government would focus on many construction projects under Budget 2011.

Its president Kwan Foh Kwai hoped the Government would ensure the speedy award and efficient implementation of high impact projects.

“Any delay in implementation, will mean additional costs to the project,” he said in a statement yesterday.

Additionally, StarBizWeek also contacted Kwan to ask on possible shortage of construction capacity such as professional and labour workforce as well as raw materials due to the implementation of the mega-size projects.

“Because most of the projects are spanned across 10 years on average, we do not expect to experience any shortage on professionals such as engineers and architects as well as raw materials.

“The current demand of raw materials are also within the capacity of suppliers,” he said. But, Kwan was a little bit concern on labour workforce as the industry now was over-reliant on foreign workers.

“That is why MBAM supports the initiative to reshape the economy through a focus on intensifying human capital development, vocational training and improving lifelong education that will help improve the labour force in Malaysia,” he said.

Meanwhile, EPF chief economist Norashikin Abdul Hamid said the development of MRB land by EPF was expected to boost the economy and the construction sector in particular.

“The Government’s decision in selecting EPF to enter into a joint-venture with the Federal Government to develop the land has been weighed and deliberated carefully, given EPF’s strong financial position,” she said.

UEM Land Bhd director of finance, corporate affairs and investment Mohd Zakir Omar supported the PPP concept and the company had been pursuing to the Government a number of projects in the past few years involving property development.

From The Star

Big projects to power economy

Stories by STARBIZ TEAM starbiz@thestar.com.my

KUALA LUMPUR: Private investment through construction activity got a serious boost from Budget 2011 after a slew of costly projects headlined by the RM40bil mass rapid transit project were announced as the building blocks towards reinventing the economy got under way.

Action on plans already laid out in the New Economic Model and the Economic Transformation Programme were introduced in the budget as funding and certainty for a number of ideas and projects previously identified were fleshed out.

“It is a budget set to springboard the initiatives of change by the Government and put Malaysia well on the path towards a stronger nation and a high income economy. The Government’s bold moves to assure investments in new growth areas and creating many jobs are exciting for us all,’’ said Malayan Banking Bhd chairman Tan Sri Megat Zaharuddin Megat Mohd Nor.

Headlining the entire budget were a number of big ticket and high-impact projects, and a number of them were earmarked in the development of Greater Kuala Lumpur such as the construction of a landmark RM5bil 100-storey tower by 2020 and RM10bil to building affordable housing and commercial properties in Sungai Buloh which would be completed by 2025.

Those projects would be developed by government agencies and the Government would also utilise RM1bil from the RM20bil Facilitation Fund, previously set up in the previous budget, as a tipping point for a number of public-private partnership projects.

“These strategic high impact projects will assist in meeting the targeted GDP growth of our economy,’’ said group managing director of MIDF Datuk Mohd Najib Abdullah.

The use of the private sector in its development plans has allowed the Government to scale back its development expenditure for 2011 to RM49.2bil while getting as much impact as possible on the economy.

“I believe this budget will fast-track the transformation process and set the pace for the private sector to contribute effectively to this national ambition,’’ said senior partner of UHY Malaysia Alvin Tee.

“The groundwork and the timeline have been clearly spelt out for National Key Economic Areas. They will create a multiplier effect which is exactly what is required for us to become a high income economy.’’

Some entry point projects (EPP) highlighted by the ETP were given the go-ahead in the budget.

The Government would spend RM146mil on an oil field services and equipment centre in Johor that would have a private investment potential of RM6bil over the next 10 years and RM50mil would be spent on a shaded walkway for the KLCC-Bukit Bintang vicinity as a boost to tourism.

The Government would also provide RM100mil towards a RM3bil integrated eco-nature resort at Nexus Karambunai resort in Sabah, which was an EPP.

“What matters most is the timely and effective implementation of the NKEA initiatives so as to produce significant tangible growth dividend in the medium term,’’ said CIMB Investment Bank chief economist Lee Heng Guie.

The budget also took cognisance of the role capital markets have in an economy by introducing a number of proposals which include increasing the number of day traders, boosting the Islamic capital markets and GLICs cutting down their stakes in listed firms on Bursa Malaysia.

The raising of the cap of foreign investments by the EPF should allow for the fund to seek higher returns and by introducing a private pension fund scheme, it would open an avenue for workers to seek alternative retirement scheme.

“The measures and initiatives announced are predominantly targeted towards enhancing liquidity, velocity and vibrancy,’’ said Bursa Malaysia CEO Datuk Yusli Mohamed Yusoff.

The budget also allowed for more risk taking by revamping insolvency laws which would amend the bankruptcy limit of RM30,000 per person and by building more technopreneurs in the country by intensifying the venture capital industry.

Green measures were also provided for, as imported hybrid cars would incur no more taxes or excise duties, biodiesel would be introduced in more states from June next year and a feed in tariff mechanism would be implemented to allow for more renewable power to be generated in the country.

Although increasing private expenditure is important in transforming the economy, the budget also contained proposals to improve human capital in the country by improving the quality of education and the range of vocational training.

“In an ever-increasingly competitive environment, its is crucial to build a workforce comparable with global talents. Our workforce needs to harness its full potential through education, training, up-skilling and re-skilling programmers to achieve national growth targets,’’ said Kelly Malaysia managing director Melissa Norman.

While the broader economy would get a lift from the anticipated rise in private investment, the Government sought to increase its revenue by increasing sales tax by one percentage point to 6%. Subscribers of paid TV services, such as Astro, would be hit from an imposition of the 6% service charge on their bills.

Furthermore, the Government is taking steps to reduce the number of low skilled foreign workers in the country by gradually increasing the levy on such workers.

“Concentrating on lower skilled foreign workers is an impediment to us becoming a high income nation,’’ said Deloitte KassimChan Tax Services Sdn Bhd country tax leader Ronnie Lim.

Measures to help first-time home buyers were announced but the budget has in essence sidestepped the issue of rising house prices.

The housing lobby would not be the only special interest group that would be smiling.

Guinness Anchor Bhd managing director Charles Ireland said it was prudent for the Government not to impose another round of excise duty on alcohol for next year as that would have exerted tremendous pressure on the industry and put further pressure on the F&B industry and tourism.

YTL Comms to launch wireless hybrid TV

YTL Communications Sdn Bhd will launch an all-wireless hybrid television (TV) service by end-2011, making Malaysia the first in the world to offer the next-generation service.

This is made possible with the signing of the licence and services agreement between YTL Communications and next-generation TV innovator, Sezmi Corp, he said.

"The agreement gives YTL Communications the rights to deploy hybrid TV service in Malaysia and throughout Asia-Pacific," said its executive chairman, Tan Sri Francis Yeoh Sock Ping, at the signing ceremony in Kuala Lumpur today.

Also present were Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed and chairman of Malaysian Communications and Multimedia Commission, Tan Sri Khalid Ramli.

The new service will bring together TV, video-on-demand and Internet content in one converged platform that is personalised to the specific needs of the users and is seamlessly accessible on a fourth generation (4G) mobile network.

Yeoh, however, declined to unveil details of the investment to deploy the service in Malaysia as well as the partnership with Sezmi.

California-based Sezmi, a four-year-old Silicon Valley start-up, offers an Internet-connected set-top box with a digital aerial.

Sezmi is working with service providers and content partners around the world to deliver a transformative TV choice for all TV consumers.

As for Malaysia, Yeoh said, there would also be local content.

"When we launch our 4G mobile Internet service next month we will deliver to Malaysia a wireless dual-play service -- broadband and voice on our 4G network," YTL Communications' chief executive officer, Wing K. Lee, said.

Earlier, Mustapa said with the venture, content and technology know-how would be delivered from Malaysia to the rest of the world.

"This will create a vibrant and healthy ecosystem of content, application and devices that will drive the growth of high-skilled, high-income jobs, in line with the government's drive towards high-income economy," he said.

The "quad-play", as the industry calls it, would require new devices and equipment to be developed and manufactured in Malaysia, he said.

"We will be able to attract manufacturers of these high-technology devices and equipment to meet the local demand and serves as a springboard to drive regional and global export opportunities," he said. -- Bernama

Read more: YTL Comms to launch wireless hybrid TV

DOW closes above 11,000 for the first time since May

OSK Research maintains Buy on Dialog, target price RM1.47

Written by OSK Research Friday, 08 October 2010 08:46

KUALA LUMPUR: OSK Research is maintaining its Buy call on DIALOG GROUP BHD [] and its target price is RM1.47 based on sum-of-parts valuation.

On Thursday, Oct 7, Dialog announced the Johor approved to award Dialog the exclusivity to develop an independent deepwater petroleum terminal at Pengerang, Johor for a period of 60 years.

However, this approval is subject to the outcome of a detailed feasibility and environmental impact assessment.

“We understand that the technical part of the feasibility study has been completed and this concluded that the site is suitable for land reclamation of about 500 acres and the phased CONSTRUCTION [] of approximately 5 million cubic metres of storage capacity for the proposed terminal. Nevertheless, the environmental impact assessment is still in progress,” the research house said on Friday, Oct 8.

OSK Research said it is good that Dialog had received the “go ahead” from the Johor Government to build the independent deepwater storage terminal for oil products in Pengerang.

“This is because it will be difficult to move to the next stage of development otherwise. Hence, since the Government has given its green light, we believe it would be a matter of time for the environmental impact assessment to be completed and once done, we believe Dialog will start with the Phase 1 construction,” it added.

WCT get concession for RM486m complex at LCCT

Written by Surin Murugiah Friday, 08 October 2010 17:56
KUALA LUMPUR: WCT BHD [] has secured a contract from Malaysia Airports Holdings Bhd (MAHB) to develop the new low cost carrier terminal (KLIA2) integrated complex on build-operate-transfer concession.

WCT said on Friday, Oct 8 the concession is for 25 years and may be extended for a further 10 years upon expiry. The development of the complex would be undertaken by a special purpose vehicle (SPV) in which WCT and MAHB will hold 70:30 equity interest.

“The CONSTRUCTION [] cost of the integrated complex is estimated at approximately RM486 million which the SPV will finance partly via internally generated funds and partly by bank borrowings. The construction of the Integrated Complex is expected to be completed by June 30, 2012,” it said.

Under the concession, WCT via the SPV will undertake the design, procurement, engineering, construction, completion, and thereafter, the operation, management and maintenance of the complex for the duration of the concession.

“As KLIA2 will be a dedicated terminal for low-cost carriers and in view of the expected increase in demand for low cost air travel, the prospects of the SPV are expected to be positive,” said WCT.

The integrated complex comprises of a transportation hub for taxis and buses; one building with net lettable area of approximately 437,000 sq ft and car parks with up to 6,000 parking bays.