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Construction: Changes at the top for MRT project?

Construction sector
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Over the weekend, The Edge weekly reported that there is now speculation there could be changes in how the Klang Valley MRT project is managed.

The project has officially kicked off with the launch of the Sungai Buloh-Kajang line after the confirmation of the final alignment. The new 51km-line (9.5km underground) will have 31 stations, with another three earmarked for future stations. Four of them will interchange with existing modes of rail transport (LRT, KL Monorail and KTM).

The final cost of this new line is expected to be confirmed ahead of the launch of the KL Transport Master Plan scheduled in September. Earlier indications are that the total outlay would now reach about RM20 billion.

Under the present structure, Syarikat Prasarana Negara Bhd (SPNB) is the owner of the project with the newly minted Land Public Transport Commission serving in a regulatory role.

The Edge weekly has now indicated that the government could bring in some changes at the top with the appointment of a new project manager from outside. The report added that the new party — which was involved in the Singapore MRT project — has been touted to oversee this massive project.

If this news is true, there are significant implications. Firstly, this development may cause some uncertainties about the exact chain of command for the MRT project.

Secondly, details governing the MMC-Gamuda JV's role as the project delivery partner (PDP) have yet to be firmed up.

Thirdly and most importantly, we are not sure how this latest development will impact the rollout of contract awards for the Sungai Buloh-Kajang line. Construction is expected to kick off in November for completion in 2016. Groundworks have  commenced on three sites (Semantan, Cochrane and Sungai Buloh).

In our view, Gamuda would be the most affected for any delays in the rollout of the MRT project.

On the flip side, we believe the building materials sector will offer an alternative but still a direct play on the MRT project.

Regardless of the contractors that eventually secure the contracts, this massive project will likely increase demand for basic building materials. In this space, we like Ann Joo Resources Bhd (steel), Lion Industries Bhd (steel), Lafarge Malayan Cement Bhd (cement) and Kimlun Corp Bhd (tunnel lining). — AmResearch, July 18

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