MRT 2 major awards in the offing

Construction sector

Maintain “overweight”: The Edge weekly reported that IJM Corp Bhd, Sunway Construction Group Bhd (SunCon) and Gadang Holdings Bhd are among the leading contenders for major work packages under the mass rapid transit (MRT) 2 line. The weekly paper also reported that Mudajaya Group Bhd and Ahmad Zaki Resources Bhd could also be in the mix of things.

Just like the MRT 1 line, Mass Rapid Transit Corp Sdn Bhd, wholly-owned by the ministry of finance, is the developer and asset owner of MRT 2. To date, only four advanced packages have been awarded between last November and early February this year.

MRT 2 is estimated to have an end-to-end journey time of 82 minutes. The proposed alignment moves along the Sungai Buloh-Serdang-Putrajaya corridor. The total length of the route is approximately 52.2km (with the underground portion running for 13.5km). It will have major stations in Bandar Sri Damansara, Kepong, Jalan Tun Razak, KLCC, Tun Razak Exchange, Kuchai Lama, Seri Kembangan and Cyberjaya.

This latest news could provide more impetus to the roll-out of the MRT 2 awards. While Gamuda Bhd is a clear beneficiary — having already bagged the project delivery partner award in addition to being a favourite for the tunnelling package, we believe existing contractors that are involved in MRT 1 to be well positioned to secure more jobs under MRT 2.

For this, we fancy both IJM Corp and SunCon — given their track record and scalability in delivering the MRT jobs. IJM Corp won two major contracts under MRT 1: (i) construction of a viaduct guide from Maluri Portal to Plaza Pheonix (RM974 million); and (ii) elevated stations at Taman Bukit Ria, Taman Bukit Mewah, Leisure Mall and Plaza Pheonix (RM229 million).

SunCon is still involved in the ongoing works from Section 17 to Semantan portal (RM1.2 billion). Notwithstanding this, we also like specialist contractors that would also benefit from continued order flows when construction works on MRT 2 begin as scheduled by the second quarter of 2016. Kimlun Corp Bhd (tunnel lining/segmental box girdles) and Econpile Holdings Bhd (piling works) feature prominently within this angle. — AmInvestment Bank, Feb 29

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This article first appeared in The Edge Financial Daily, on March 1, 2016. Subscribe to The Edge Financial Daily here.