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Major KL LRT extension work packages finally out
• Last Friday, Syarikat Prasarana Negara Bhd (SPNB) finally announced the maiden civil works packages (Package A) for both the Kelana Jaya as well as Ampang lines. The former involves a 17km extension from Kelana Jaya station to Putra Heights along with 13 new stations. The later covers a 17.7km track line between Sri Petaling and Putra Heights - also with 13 new stations. Given the competitive bidding process, we estimate pre-tax margins for these jobs to range between 5% and 6%.
• Award of works was for the initial portion of the facilities package (Package A) for both lines. For the Kelana Jaya line, Trans Resources Corp Sdn Bhd – a unit of TRC Synergy Bhd (TRC) – was picked as the main facilities contractor. The extension works runs from the Kelana Jaya station to Summit (Station 7) over a track line of ~9.2km.
• The total contract value for this line is estimated at RM950mil over a period of 30 months. Nominated sub-contracting works for the fabrication and delivery of segmental box girder (SBG) went to the UEM Builders Bhd-Intria Bina Sdn Bhd JV at a total contract value of RM93mil (21 months).
• For the Ampang line, SPNB awarded the main facilities contract work to a JV between Bina Puri Holdings Bhd and Tim Sekata. The 7.4km section covers Seri Petaling station to Station No.5. The entire contract is worth RM634mil over 27 months. The JV was also picked as the nominated sub-contractor for the SBG works (RM68mil: 19 months).
• The main contractors for Package A will also manage nominated-sub contractors for additional contracts worth RM469mil (Kelana Jaya line) and RM305mil (Ampang Line) respectively. These jobs would be dished out via a separate ongoing open tender process.
• Latest announcement validates our earlier conviction that maiden contracts for the LRT extension works would be awarded by end-4Q10. Most importantly, more civil jobs are up for grabs under the remaining portion of the facilities package (Package B).
• This involves the balance 9.2km (Summit to Putra Heights station: 7.8km) and 10.3km (Station No.5 to Putra Heights station: 10.3km) under the Kelana Jaya and Ampang lines respectively. Tenders will be called by mid-2011 upon approval of the final railway scheme.
• By extension, we estimate that another RM1.7bil worth of jobs that are up for grabs under Package B – and a combined total of RM3.3bil under for the facilities works (i.e. both Package A and B. This is slightly higher than the high-end of the RM2.8bil-RM3.2bil bidding range for the total facilities package – based on our earlier checks.
• Assuming the contractors under Package A are not chosen again, we reckon Gamuda Bhd, IJM Corp Bhd and WCT Bhd to be strong candidates based on their select strengths – with MTD-ACPI potentially in the running for the SBG contracts. This would also likely lend a significant kick to domestic steel demand – triggering a multi-year re-rating for steel stocks. Our top picks within this space this report were preparedResources Bhd and Lion Industries Bhd.
• Last Friday, Syarikat Prasarana Negara Bhd (SPNB) finally announced the maiden civil works packages (Package A) for both the Kelana Jaya as well as Ampang lines. The former involves a 17km extension from Kelana Jaya station to Putra Heights along with 13 new stations. The later covers a 17.7km track line between Sri Petaling and Putra Heights - also with 13 new stations. Given the competitive bidding process, we estimate pre-tax margins for these jobs to range between 5% and 6%.
• Award of works was for the initial portion of the facilities package (Package A) for both lines. For the Kelana Jaya line, Trans Resources Corp Sdn Bhd – a unit of TRC Synergy Bhd (TRC) – was picked as the main facilities contractor. The extension works runs from the Kelana Jaya station to Summit (Station 7) over a track line of ~9.2km.
• The total contract value for this line is estimated at RM950mil over a period of 30 months. Nominated sub-contracting works for the fabrication and delivery of segmental box girder (SBG) went to the UEM Builders Bhd-Intria Bina Sdn Bhd JV at a total contract value of RM93mil (21 months).
• For the Ampang line, SPNB awarded the main facilities contract work to a JV between Bina Puri Holdings Bhd and Tim Sekata. The 7.4km section covers Seri Petaling station to Station No.5. The entire contract is worth RM634mil over 27 months. The JV was also picked as the nominated sub-contractor for the SBG works (RM68mil: 19 months).
• The main contractors for Package A will also manage nominated-sub contractors for additional contracts worth RM469mil (Kelana Jaya line) and RM305mil (Ampang Line) respectively. These jobs would be dished out via a separate ongoing open tender process.
• Latest announcement validates our earlier conviction that maiden contracts for the LRT extension works would be awarded by end-4Q10. Most importantly, more civil jobs are up for grabs under the remaining portion of the facilities package (Package B).
• This involves the balance 9.2km (Summit to Putra Heights station: 7.8km) and 10.3km (Station No.5 to Putra Heights station: 10.3km) under the Kelana Jaya and Ampang lines respectively. Tenders will be called by mid-2011 upon approval of the final railway scheme.
• By extension, we estimate that another RM1.7bil worth of jobs that are up for grabs under Package B – and a combined total of RM3.3bil under for the facilities works (i.e. both Package A and B. This is slightly higher than the high-end of the RM2.8bil-RM3.2bil bidding range for the total facilities package – based on our earlier checks.
• Assuming the contractors under Package A are not chosen again, we reckon Gamuda Bhd, IJM Corp Bhd and WCT Bhd to be strong candidates based on their select strengths – with MTD-ACPI potentially in the running for the SBG contracts. This would also likely lend a significant kick to domestic steel demand – triggering a multi-year re-rating for steel stocks. Our top picks within this space this report were preparedResources Bhd and Lion Industries Bhd.
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