MRT jobs to be out in May, ahead of schedule

CONTRACTS for work on Malaysia's first mass rapid transit (MRT) line, linking Kajang and Sungai Buloh, will be awarded in May this year, an official said.

This is earlier than some analysts expected and will likely be welcomed by the market, which has been looking for projects like this, which come under the government's Economic Transformation Programme (ETP), to show progress.

The project's groundbreaking is supposed to kick off this July.

The Land Public Transport Commission chief executive officer Mohd Nur Ismal Kamal said tenders for the preliminary and main works will likely be called by Syarikat Prasarana Negara Bhd at the end of April, with the awards to be announced "around mid-May".

The Prasarana-appointed project manager, a joint venture between Gamuda Bhd and MMC Corp Bhd, will be able to give recommendations on which firms should get contracts, but it will be the government who has the final say, Nur Ismal said.

It is "not clear" yet if tenders for rollingstock, which include trains, will also be called before the project's groundbreaking, he added.

The Kajang-Sungai Buloh line, expected to be operational by 2016, is the first of possibly at least three MRT lines to come that would run a length of between 55 and 60km.

The three lines may cost RM36.6 billion in total, going by Gamuda-MMC's initial estimates in 2009, but this has yet to be determined.

Nur Ismal said the target cost for the first line is currently being worked out.

A special purpose vehicle set up by the Ministry of Finance Inc will be tasked to raise funds for this project, and possibly other infrastructure projects in future, he said.

There will be incentives for MMC-Gamuda if they can deliver the project below the target cost. Should they incur cost over-runs, however, they will have to pay up the difference, he said.

"We are highly focused on delivering the first line," he said.

Nur Ismal was speaking to reporters in Putrajaya after Prime Minister Datuk Seri Najib Razak announced 19 more projects, including the MRT, under the ETP.

More news on the second and third lines may be unveiled in late March or early April this year, he added.

"The timeline for the (first) MRT tender is slightly ahead of our expectations ... it should be viewed positively by the market," Chris Eng, head of reach at OSK Investment Bank Bhd, told Business Times.

Najib said the MRT will employ about 130,000 people at its peak construction phase and have a significant multiplier impact on associated industries.

Investment in it will see an incremental gross national income contribution of RM21.3 billion come 2020.

Read more: MRT jobs to be out in May, ahead of schedule

Govt-funded MRT

By Ooi Tee Ching

The government will set up a special vehicle company (SPV) to channel total funding for the proposed greater KL mass rapid transit (MRT) project.

Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Ismal Kamal said the multi-billion ringgit project will not be undertaken on a turnkey basis and contractors need not seek financing.

"The greater KL MRT project is based on an international concept of project delivery partner, a hybrid of turnkey and project management consultancy," he told reporter at a briefing in Kuala Lumpur yesterday.

Also present at the briefing was SPAD chairman Tan Sri Syed Hamid Albar.

"I read some newspaper headlines saying MMC-Gamuda bags RM36 billion MRT project. That is factually wrong," he said.

Abdul Hamid assured that all MRT job packages will be tendered out to both local and international contractors.

"There's no room for direct negotiation. Contract awards will be based on merit, track record and financial strength of the contractor," he said.

"The MMC-Gamuda joint venture has been appointed by Syarikat Prasarana Negara Bhd as the project delivery partner. The RM36 billion figure is the construction cost estimated by MMC-Gamuda, it is not our estimate," he said.

As the project delivery partner, Nur Ismal explained that MMC-Gamuda will take on the risks and responsibilities in ensuring the MRT project is delivered on time. They will sit in with the government in the tender evaluation and appointment of contract packages.

Syed Hamid said the alignment of the Sg Buloh-KL-Kajang route will be displayed for community feedback in March 2011. A ride along the 60km line will take some 90 minutes.

The proposed MRT line will integrate with existing KTM Komuter stations in Sg Buloh and Kajang and light rail transit (LRT) stations in Kelana Jaya and Maluri. About 10km of the 60km line will be underground.

"We hope to roll out the tender for the first batch of job packages by April 2011," he said.

Read more: Govt-funded MRT

Building up to a super bull run

A super bull run is on the horizon for Malaysian construction stocks next year on optimism that the RM40 billion Mass Rapid Transit project will start in July.

The bullish outlook is also backed by new government initiatives such as the Economic Transformation Programme and the 10th Malaysia Plan, said UOB KayHian head of research Vincent Khoo.

Research houses are maintaining their overweight call on the sector.

"We expect a bull run next year," Khoo told Business Times.

An analyst from TA Research said the stock market needs news like the MRT as a catalyst for construction stocks to sustain its upbeat momentum.

He said judging from the size of the MRT project, it is certain that almost all local construction companies will benefit.

"If the government divides the project evenly, then each company could get contracts worth RM500 million to RM1 billion. This augurs well for the sector," he said.

The MRT, comprising three lines, is the largest infrastructure project in Malaysia's history. The last project announced was the RM12.5 billion double tracks.

Analysts said the first of the three MRT lines, joining Sungai Buloh and Kajang, running through Kuala Lumpur City Centre, is estimated at RM14 billion. The line will cover 60km and have 35 stations.

They said MMC-Gamuda Joint Venture Sdn Bhd may get the tunneling portion from Sungai Buloh to Kajang, worth RM6 billion to RM8 billion.

Master Builders Association Malaysia president Kwan Foh Kwai expects companies like Sunway Construction, IJM Construction, Muhibbah Engineering, Bina Puri, Loh & Loh, MRCB Engineering, UEM Builders, WCT, Ranhill and Ahmad Zaki to bid for the MRT.

Others include Eversendai Corp, Crest Builders, Putra Perdana Construction and MTD ACPI.

Ahmad Zaki managing director Datuk Wan Zakariah Muda said the MRT news is positive for the sector. "There will be spillovers and knock-on effects. We plan to participate in the MRT," he said.

An official from Putra Perdana Construction Sdn Bhd said it will eye packages to build structures, stations, bridges and tunnel lining work.

Read more

GAMUDA - HDBSVR reaffirms Buy rating on Gamuda, TP RM4.90

KUALA LUMPUR: Hwang DBS Vickers Research reaffirms its Buy rating and sum-of-parts derived target price of RM4.90 for GAMUDA BHD [], which remains on its high conviction list. Its last traded price was RM3.79.

The research house said on Friday, Dec 10 Gamuda is looking to bid for the Qatar MRT project next year worth US$45bn (RM141bn). This target completion date is 2021, ahead of the FIFA World Cup in 2022.

HDBSVR said within the Middle East, Gamuda already has two projects in Qatar ' the New Doha International Airport (88% completed) and Durkhan Highway (100% completed). It is also bidding for the second phase of Durkhan Highway worth at least RM1bn together with WCT where a result should be known soon.

Gamuda's Group MD Datuk Lin Yun Ling was quoted saying he believed the company will be able to garner enough resources for both the KL MRT and Qatar MRT should it be successful in bagging both.

'While not made official, we understand the MMC-Gamuda JV will be appointed project delivery partner (PDP) for the RM36bn MRT project. This will allow it full control over the project while also bearing execution risk.

'However, what remains unclear for now is the RM14bn tunneling works which the JV is eyeing. In our view, the JV is also frontrunner to clinch this given its past expertise which is a scarcity among the local contractors,' said HDBSVR.

The research house also noted that it was not in the government's interest to delay this project by opening up the tender to foreign contractors given the MRT is an vital component of the ETP programme.

Taken from here...

Study on MRT to be completed early October

TECHNICAL study on the proposed mass rapid transit (MRT) project, conducted by the Land Public Transport Commission (LPTC) and a consultant appointed by the Ministry of Finance, will be completed by early October.

LPTC said a report on the technical study will be presented to the Steering Committee on the Klang Valley Integrated Transportation System headed by the Secretary-General of the Treasury.

A paper on the proposal is expected to be drawn up and tabled in Cabinet soon after that, LPTC said in a statement yesterday.

The proposed MRT system, consisting three lines running a total of 150km and covering an area within a 20km radius of central Kuala Lumpur, was initiated by a joint venture between MMC Corp Bhd and Gamuda Bhd earlier this year.

The proposed project is valued at RM36 billion, excluding the cost of land acquisition and rolling stock.

The three-month technical study on the proposal, carried out by LPTC and consultant Minconsult Sdn Bhd, began on July 1 this year.

"The technical study covers an appraisal by the two parties on the viability of the proposal. Among the areas covered were the corridor and alignment, engineering, environmental and social impacts and others," LPTC chief executive officer Mohd Nur Ismal Mohamed Kamal said in the statement.

He stressed that LPTC's key objective is to ensure the MRT project will meet the needs of the people in order to encourage increased usage of public transport.

When the technical study is completed, a further assessment called the Value Management Study (VMS) will be conducted by LPTC and the Economic Planning Unit.

The second study is required as a project of such magnitude will need early identification of opportunities to ensure its sustainability, LPTC said.

A VMS is a common approach practised globally, especially on projects that require optimisation of the funding mechanism and prudent spending.

In other words, the VMS will ensure that the MRT project is economically sustainable and optimises government spending whilst promoting public interest as its priority.

Read more: Study on MRT to be completed early October

MMCCORP - Winds of Change

Initiate coverage with buy call at RM2.53 and target price RM3.20

MMC, an integrated utilities and infrastructure player, is strongly leveraged on Malaysia's improving economy (1H2010 GDP 9.5% year-on-year). For example, container volume at PTP and Johor Port are up 13% and 5% y-o-y for year-to-date June, passenger traffic at Senai airport is resilient at 1.4 million, Malakoff IPP's average despatch factor is 50% (against 49% in 4Q2009) and Gas Malaysia's volume is up 14% for 1H2010.

The company is a strong proxy to Iskandar Malaysia, which makes up an estimated 68% of MMC's sum-of-parts (SOP) value. It owns two ports ' PTP and Johor Port, the only airport, located in Senai, 16 water treatment plants, and a landbank of 4,296 acres. Completion of key infrastructure projects by 2012, such as Legoland, the Newcastle University Medicine Malaysia Campus in EduCity and Marlborough College will yield steep appreciation potential in land values. We estimate every RM5 psf rise in land value will raise our SOP valuation by 8%. Recent transactions by EQ solar and MOX valued raw land at RM25 psf with infrastructure. Improving relations between Singapore and Malaysia could also offer substantial development opportunities, such as a rapid transit system between Tanjung Puteri in JB and Singapore, bullet train and/or a third link to Singapore. This will see land values reflate.

Alternative proxy to MRT. Key to its construction arm will be the MMC-Gamuda JV bid for RM36 billion MRT project in Kuala Lumpur.

If it comes to fruition its order book will triple and add another 17 sen per share to its SOP. Other potential projects include other road-based projects and replicating the SMART tunnel in other states. We assume every RM1 billion increase in new order wins will raise our SOP valuation by 4%. It is the only construction-related stock included in the KLCI FBM 30 and should command some IPP premium with the delisting of Tanjong. ' HwangDBS Vickers Research, Sept 2

This article appeared in The Edge Financial Daily, September 3 2010.

Maybank IB Research keeps Malaysian construction plays at Overweight

Maybank IB Research keeps Malaysian construction plays at Overweight as house thinks there's more than 50% chance government will give green light for MYR36 billion ($11.25 billion) Klang Valley MRT project in August. Analyst Wong Chew Hann says proponents of the plan Gamuda (5398.KU), MMC Corp (2194.KU) may have addressed major concerns with half of planned construction cost to be financed via serial bond issued by firms; other MYR18 billion will be via public funds, MYR2 billion/year "manageable" for government's coffers. Wong says Gamuda, MMC Corp will be biggest beneficiaries, but jobs will filter down entire construction chain (physical works likely to be tendered out), including building material players; earliest start to project likely in 2H11. Gamuda shares last down 0.9% at MYR3.33, MMC Corp +1.7% at MYR2.45.

Blocking eh... Why aah??

SunCon, WCT, Fajar, Muhibbbah pre-qualified as main contractors for LRT extensions

Written by Joseph Chin Wednesday, 28 April 2010 11:35

KUALA LUMPUR: Syarikat Prasarana Negara says 17 applicants have been pre-qualified as main contractors for the extensions to the light rail transits for the Ampang and Kelana Jaya lines.

It said on Wednesday, April 28 the applicants have demonstrated their technical and financial capacity and capability with the relevant infrastructure works experience.

They are:
1.Sunway CONSTRUCTION [] Sdn Bhd
2.Fajarbaru Builder Sdn Bhd – Signatium Construction Sdn Bhd JV
3.WCT – Sinohydro JV
4.IJM Construction Sdn Bhd
5.Ranhill – CCCC JV
6.Muhibbah Engineering Sdn Bhd
7.Gamuda Berhad
8.UEM BUILDERS BHD [] – Intria Bina Sdn Bhd JV
9.MMC- Zelan JV
10.MRCB Engineering Sdn. Bhd
11.Trans Resources Corporation Sdn Bhd
12.BPHB – Tim Sekata JV
13.Zabima – Leighton JV
14.Mudajaya Corporation Berhad
15.MTDC – Persys JV
16.Loh & Loh Constructions Sdn Bhd
17.Ahmad Zaki Sdn Bhd

In addition, 15 applicants have been pre-qualified as nominated sub-contractors for the fabrication and delivery of segmental box girder. The successful contractors will be notified officially in due course by Prasarana. The 15 are:

1.Sunway Construction Sdn Bhd
2.Fajarbaru Builder Sdn Bhd – Signatium Construction Sdn Bhd JV
3.WCT – Sinohydro JV
4.IJM Construction Sdn Bhd
5.Ranhill – CCCC JV
6.Muhibbah Engineering Sdn Bhd
7.UEM Builders Bhd – Intria Bina Sdn Bhd JV
8.MMC- Zelan JV
9.MRCB Engineering Sdn. Bhd
10.BPHB – Tim Sekata JV
11.Zabima – Leighton JV
12.MTDC – Persys JV
13.Ahmad Zaki Sdn Bhd
14.Bina Puri – Acre Works – SNC Lavalin JV
15.UEM Construction Sdn Bhd – Projek Penyelenggaraan Lebuhraya Berhad (PROPEL) JV

The financing of the project will be from Islamic bonds guaranteed by the Government. In September 2009, Prasarana had successfully launched RM4.0 billion Sukuk programme of which RM2.0 billion had been raised and oversubscribed by 5.3 times for the 15-year and 2.7 times for the 20-year tranche to part finance the line extension project. The balance of RM2.0 billion will be raised as the project implementation progresses.

MMC Corp (2194.KU) at Trading Buy

OSK Research keeps MMC Corp (2194.KU) at Trading Buy with unchanged MYR2.95 target. "Our earnings forecasts are largely unchanged as higher earnings from Gas Malaysia and Malakoff are offset by poorer margins at Port of Tanjung Pelepas and the double track project," says analyst Chris Eng; adds while MMC's long-term prospects remain good given its dominance in Malaysian infrastructure, house still hopeful of contract award to spur short term sentiment. Stock last flat at MYR2.38. (ECH)