Johor MB approves Mastel-KUB RM1.23b intra-city commuter train service plan

KUALA LUMPUR: The Johor government has approved the proposed RM1.23 billion intra-city commuter train service in Iskandar Malaysia, which would involve 100km rail network.

Menteri Besar Datuk Abdul Ghani Othman had on Friday, April 15 given the approval to Metropolitan Commuter Network Sdn Bhd - a joint venture between KUB MALAYSIA BHD [] and Malaysia Steel Works (KL) Bhd (Masteel).

A joint statement by Iskandar Regional Development Authority (IRDA) and Metropolitan Commuter Network said the intra-city train service would involve the building of seven new stations and 16 halts connecting all major suburbs in Iskandar Malaysia.

The commuter service would cover over 100km of rail network and serve all major upcoming Tipping Point developments such as the Johor Premium Outlet, Legoland Malaysia, Educity, Hi-Tech Park-Senai, and Lake Hill Resort City.

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Masteel, KUB in RM1b plan for inter-city rail transit infra in Iskandar Malaysia

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) and KUB MALAYSIA BHD [] (KUB) have proposed to build and operate a 100km inter-city rail transit system in Iskandar Malaysia which will connect to the MRT line from Singapore.

The companies said in a joint statement on Wednesday, Jan 19, 2011, the project could cost over RM1 billion and consists of up to 25 commuter stations in major towns in the Iskandar Malaysia region in the initial stage.

"The operation of the inter-city rail transit shall be based on a 25-year concession," they said in the statement after the signing of the head of joint venture agreement to undertake the project.

Masteel and KUB would hold 60% and 40% equity stakes respectively in the JV company, Metropolitan Commuter Network Sdn Bhd. The project would be undertaken in three phases and completed within 24 months from project commencement.

The building of the rail transit infrastructure would also be funded by project financing under the public-private Partnership scheme (PPP).

Masteel managing director and chief executive officer Datuk Seri Tai Hean Leng said this would be a major infrastructure project in Johor as it would greatly boost its connectivity and economy.

"The upcoming inter-city rail transit is a reflection of Johor's continued progress thus far, and I believe that it would serve to bring the state to the next level of growth and vibrancy," he said.

The project will ease traffic congestion, estimated to grow at 4.2% every year along Johor and Singapore.

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MASTEEL - Masteel hopeful of riding on govt projects

Research House: OSK

Upgrade to trading buy at 98 sen with a target price of RM1.22: We visited Malaysia Steel Works (KL) Bhd (Masteel) last week and gather that its management is hopeful of riding on a long list of projects announced by the government.

After spending some RM60 million to RM70 million over the past two years to modify its furnace and billet caster, Masteel expects its billet capacity to progressively increase from 450,000 tonnes per year (tpy) to 650,000 tpy in FY12 by deploying in stages, 130mm billets instead of the original 120mm entities.

The company has also identified a plant near its existing rolling mill to embark on its downstream expansion. As the plant only requires minimum modification conversion to install a new rolling facility, the company has identified three machine suppliers from China to expedite the delivery of the required machines.

The management is targeting to increase its rolling capacity to 500,000 tpy upon full commissioning in FY12. It hopes this would be on time to ride on the string of public infrastructure and building projects announced by the government recently.

While we expect weak financial performance from steel mills in the second half of FY2010 (2HFY10), Masteel suggests that the company's sales is encouraging. Managing director/chief executive officer Datuk Seri Tai Hean Leng said the company had endeavored to import containerised scrap metal after the liberalisation of the scrap market since end-2008.

Although we are surprised at the possible increase in sales volume, we think Masteel might have benefited from being centrally located in the catchment areas of steel demand. Also being a smaller mill, the volume it produces is way easier for the market to absorb. We also suspect that its management might have accumulated enough experience in dealing with cheaper scrap imports by container, which are normally priced at about US$20 (RM61.80) discount compared to bulk imports.

Therefore, we are revising upwards our FY10 net profit estimates by 62.7% to RM42.4 million and FY11 numbers by 7% to RM47.5 million. As its earnings may exceed market expectation, we upgrade our call to Trading Buy, with a new target price of RM1.22. ' OSK Research, Nov 8

This article appeared in The Edge Financial Daily, November 9, 2010.