Kenanga Research: Awards for MRT3 line likely to be in 1H2022

KUALA LUMPUR (April 14): Kenanga Research expects the awards for the Mass Rapid Transit 3 (MRT3) line would likely be out in the first half of 2022 (1H 2022) at the earliest, following the submission and evaluation process of tenders which is expected to be in August 2021. 

In a research note today, the brokerage firm was positive on the new details on the MRT3 line following its behind-the-scene progress.

“Despite the stretched out construction period of 10 years, should our guesstimate contract quantum of RM32.9 billion be proven accurate, it would be an upside surprise.

“(We) reiterate our ‘overweight’ call on the sector,” it added. 

MRT3 will have more than 30 stations and 10 interchanges spanning 50 kilometres (km), longer than the initial expectation of 40km. 

Despite the government’s commitment in supporting the project, MRT Corp is exploring 10 per cent to 30 per cent private funding arrangements to alleviate the country’s fiscal burden.

“From this aspect, we believe a deferred payment scheme (of 10 per cent to 30 per cent of total contract cost) can be adopted to conserve government’s cash flows,” it added. 

Aside from Gamuda being the obvious beneficiary due to the longer-than-expected underground portion and being the project lead, the other beneficiaries would be Kimlun, IJM and MRCB, Kenanga Research said.

Meanwhile, should the private funding materialise, the brokerage believes that IJM and MRCB stand a good chance to undertake a bigger role in the construction of MRT3, given their relatively bigger and stronger balance sheet which enables them to gear up to provide funding needs. 

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