Construction boom gathers strength

KUALA LUMPUR (Aug 5): The construction boom seems to be gathering steam with a slew of mega infrastructure contracts being awarded of late. The latest project to be awarded is the Sungai Besi-Ulu Kelang Expressway (Suke), after the Pan Borneo Highway.

Jaks Resources Bhd and Zelan Bhd yesterday won the construction contracts from the concessionaire of the Suke project.

Meanwhile, Prasarana Malaysia Bhd president and chief executive officer Datuk Azmi Abdul Aziz told the media in June that the company would begin to award the first batch of work packages for the upcoming RM9 billion 37km light rail transit (LRT) Line 3 project.

According to Azmi, the first batch of work packages would consist of a building for workers’ quarters, a depot, and certain advanced work for the said LRT system.

For Suke, Jaks’ wholly-owned unit Jaks Sdn Bhd bagged a RM508.5 million package, while a consortium comprising Zelan’s wholly-owned subsidiary Zelan Construction Sdn Bhd and Hasrat Sedaya Sdn Bhd won another package worth RM257.61 million.

The packages were awarded by Turnpike Synergy Sdn Bhd, a unit of Projek Lintasan Kota Holdings Sdn Bhd, which is wholly owned by Permodalan Nasional Bhd.

Suke, a 31.8km elevated highway, begins at Sri Petaling and passes through Sungai Besi, Alam Damai, Cheras-Kajang, Taman Bukit Permai, Taman Putra, Taman Permai Jaya, Taman Dagang Permai, Taman Kosas, Ampang and Taman Hillview before exiting at Ulu Kelang.

In a filing with Bursa Malaysia, Jaks said its package involves the construction of the main line and other associated works from chainage 16700 to chainage 19400 of the highway.

Jaks said its contract is for a 30-month duration with an expected completion date on Feb 28, 2019.

Jaks expects the contract to contribute positively to its revenue and earnings for the current year ending Dec 31, 2016 (FY16) and the following financial years during that period.

Jaks chief executive officer Andy Ang Lam Poah said the contract would further enhance its existing order book. “We will continue to pursue other road, water, power and sewerage infrastructure tenders domestically and in Vietnam.

“With our track record in delivering past projects, we are confident that Jaks is in a good position to secure more projects,” he said in a statement.

In a separate filing, Zelan said the Zelan-Hasrat Sedaya consortium would be constructing the section of the highway from chainage 15000 to chainage 16700.

“The works cover along Jalan Taman Putra for approximately 1.7km,” said Zelan. The contract duration is 30 months, commencing Aug 29.

Last month, four joint ventures (JV) were awarded contracts under the Pan Borneo Highway. The JV of Naim Engineering Sdn Bhd and Gamuda Bhd won a package worth RM1.57 billion; KKB Engineering Bhd and WCT Holdings Bhd were awarded a RM1.29 billion contract; the JV of Mudajaya Corp Bhd and Musyati Sdn Bhd bagged a RM1.33 billion contract; and Cahya Mata Sarawak Bhd and Bina Puri Holdings Bhd won a RM1.36 billion package.

The expectation that government will kick-start more infrastructure projects has lent support to the construction counters. Bursa Malaysia’s Kuala Lumpur Construction Index, which is up by 3.47% year to date has, indeed, outperformed the benchmark FBM KLCI, which has declined 2.2% so far this year.

The Construction Index has climbed 21% from a low of 236.05 points in August last year, however, the FBM KLCI has gained only 8% from last year’s low of 1,532.14 points.

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This article first appeared in The Edge Financial Daily, on Aug 5, 2016. Subscribe to The Edge Financial Daily here.