George Kent-led JV in hunt for RM500 mil water job?

George Kent (M) Bhd (G Kent) and its consortium partners appear to be in the driving seat for RM500 million worth of jobs under the Pahang-Selangor interstate raw water transfer project (IRWT), said TheEdge Weekly over the weekend.

• According to the report, G Kent has teamed up with Loh & Loh Corp (Loh & Loh) and Japan’s Hazama Corp (Hazama) to bid for these jobs. Based on our channel checks, George Kent has carved a niche as a leading water pipe meter manufacturer – but is keen to expand its footprint into infrastructure works that would include water-related jobs.

• Loh & Loh is a homegrown water specialist with a proven track record – the group has

reportedly built more than half the dams in Malaysia. Meanwhile, Japan-based Hazama is no stranger to the Malaysian construction scene – having been involved in the Selangor Water Supply project in 1989. However, exact structure and share of works between the consortium members remain somewhat uncertain at this juncture.

• The RM500 million-worth of contracts that the consortium is vying for would include: The water intake and pump station (Package 3A); and (2) sub-contracting works related to the Langat 2 water supply scheme (Langat 2).

• We understand that value of works for Package 3A of the IRWT project could range between RM300 million to RM400 million. Balance would likely come from treatment and storage facility works for raw water transferred from the pumping house and dam in Pahang.

• More importantly, we gather that the imminent award of Package 3A would likely prod rollout of other remaining portions of this massive project. So far, only the tunnelling package worth RM1.3bil has been awarded to the IJM-UEM-Kajima-Nishimatsu consortium last May.

• Major contracts yet to be officially awarded under the IRWT would include: (1) The Kelau Dam; (2) Water Intake/Piping Package (Package 3A); (3) Piping works; and (4) Langat 2 Water Treatment Plant and related facilities.

• Prior to this, there was no significant update on the remaining packages of the IRWT project save for Package 3A and the piping works. From our conversations with industry players, we gather that JAKS Resources Bhd (JAKS) has teamed up with another reputable local contractor to bid for the piping package worth up to RM400 million – with a result to be known by end-1H2010.

• We maintain our OVERWEIGHT stance on the construction sector – and expect a reacceleration of contract awards ahead of the unveiling of the 10th Malaysia Plan in June. This is further lifted by a recovery in construction margins and gradual revitalisation of order flows abroad – notably in India, the Middle East and Vietnam. For exposure to the sector, we continue to like IJM, Gamuda, WCT, Naim Holdings Bhd and Hock Seng Lee.