CIMB says KL-Singapore HSR 'relevant' to Gamuda, IJM Corp, WCT

KUALA LUMPUR (Dec 14): CIMB Investment Bank Bhd said the Kuala Lumpur-Singapore High Speed Rail (HSR) bilateral agreement was a "milestone" for the project, which would see bids from Malaysian builders.

In a note today, CIMB analyst Sharizan Rosely said the HSR theme "remains relevant to domestic rail players" in CIMB's coverage like Gamuda Bhd, IJM Corp Bhd and WCT Holdings Bhd.

"The bilateral agreement marks another big milestone for this mammoth rail project (earlier estimate: RM30 billion to RM40 billion, RM60 billion to RM65 billion as recently cited by New Straits Times).

"While it still remains premature to work out the size of contracts that will spill over to local contractors, this theme remains relevant to domestic rail players in our coverage such as Gamuda, IJM Corp and WCT. For a play on the rail theme in 2017, we continue to prefer Gamuda," Sharizan said.

He said CIMB maintained its "overweight" call on Malaysian builders.

Looking ahead, Sharizan said the appointment of a joint development partner (JDP) for the HSR is likely to happen in early 2017 to help in the overall implementation of the project.

"We understand that the JDP will provide advice on operational, technical and procurement matters relating to the high speed railway systems and operations. We still believe that the JDP is likely to be a reputable international HSR expert. It appears the JDP will also assist on the structure and monitoring of the civil works tender, which could begin in late 2017," he said. —

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