patchay
December 8th, 2010, 08:23 AM
Rail,rail, rail (Construction sector update - Maybank IB Research, Dec 2, 2010)
By Maybank IB Research
Thursday, 02 December 2010 11:12
No short supply of news-flow. We expect the Klang Valley (KV) MRT project to feature in the next batch of entry point projects (EPP) to be announced by PM Najib, potentially this month end or in the early days of 2011. The subsequent awards of the remaining KV LRT job parcels, and a revival of a 3rd LRT line are some of the positive news-flow into 2011. This should sustain interests in construction and building material stocks. We continue to Overweight the construction sector.
KV MRT as confirmed EPP? PM Najib announced two days ago a total of 9 new developments and several EPPs, adding to the earlier 9 publicised on 25 Oct during the launch of Economic Transformation Programme (ETP). We now have 16 EPPs confirmed out of the total 131 i.e. 12%, with investment value of at least RM51b, accounting for 7% of the total EPPs' RM696b investment value. We expect regular monthly updates on the EPPs from now on. By end-2010 or early-2011, we expect the KV MRT project to be firmed and the details unveiled.
PDP approach for MRT? Edge Daily today reports on the appointment of a project delivery partner (PDP) as among the salient features to be discussed by the Cabinet this month (Dec) on the KV MRT project. The PDP will be more than a project manager. We understand that it will: (i) implement the project on behalf of the government, (ii) take on the delivery risks (cost and timing), hence, ring-fencing the risks by the government, and (iii) conduct open bids for all parcels of works for cost efficiencies. This is already international practice.
Gamuda-MMC as PDP? Gamuda-MMC is eyeing the chariot master, essentially, the PDP role, for the MRT project. We understand that the PDP role for past projects in Malaysia has been undertaken by both consultants and contractors separately. Contractors as PDP has its merits: (i) material procurement at better costs, and (ii) interfacing of skills to handle the sub-contractors, all supported by a bigger balance sheet. Some of the projects undertaken by contractors as PDP are the ERL and Sentul rail line by YTL, and the electrified double-track rail project northern section under Gamuda-MMC.
3rd KV LRT line revived?
Syarikat Prasarana Negara awarded two contracts this week for the KV LRT line extension: (i) Package A for the Kelana Jaya line (RM950m; Kelana Jaya-Summit) to TRC Synergy, and (ii) Package A for the Ampang line (RM635m) and the supply of segmental box girders (RM68m) to Bina Puri. The awards for the other parcels are expected to run into 2011. Meanwhile, a new 3rd LRT line (Kota Damansara-city centre) is in the works, which could be the revival of the Kota Damansara-Cheras line pursued earlier by MRCB. This was put on the back-burner as it will run parallel to the MRT line at some stretches. UEM and IJM may have teamed up for a slice of the jobs.
By Maybank IB Research
Thursday, 02 December 2010 11:12
No short supply of news-flow. We expect the Klang Valley (KV) MRT project to feature in the next batch of entry point projects (EPP) to be announced by PM Najib, potentially this month end or in the early days of 2011. The subsequent awards of the remaining KV LRT job parcels, and a revival of a 3rd LRT line are some of the positive news-flow into 2011. This should sustain interests in construction and building material stocks. We continue to Overweight the construction sector.
KV MRT as confirmed EPP? PM Najib announced two days ago a total of 9 new developments and several EPPs, adding to the earlier 9 publicised on 25 Oct during the launch of Economic Transformation Programme (ETP). We now have 16 EPPs confirmed out of the total 131 i.e. 12%, with investment value of at least RM51b, accounting for 7% of the total EPPs' RM696b investment value. We expect regular monthly updates on the EPPs from now on. By end-2010 or early-2011, we expect the KV MRT project to be firmed and the details unveiled.
PDP approach for MRT? Edge Daily today reports on the appointment of a project delivery partner (PDP) as among the salient features to be discussed by the Cabinet this month (Dec) on the KV MRT project. The PDP will be more than a project manager. We understand that it will: (i) implement the project on behalf of the government, (ii) take on the delivery risks (cost and timing), hence, ring-fencing the risks by the government, and (iii) conduct open bids for all parcels of works for cost efficiencies. This is already international practice.
Gamuda-MMC as PDP? Gamuda-MMC is eyeing the chariot master, essentially, the PDP role, for the MRT project. We understand that the PDP role for past projects in Malaysia has been undertaken by both consultants and contractors separately. Contractors as PDP has its merits: (i) material procurement at better costs, and (ii) interfacing of skills to handle the sub-contractors, all supported by a bigger balance sheet. Some of the projects undertaken by contractors as PDP are the ERL and Sentul rail line by YTL, and the electrified double-track rail project northern section under Gamuda-MMC.
3rd KV LRT line revived?
Syarikat Prasarana Negara awarded two contracts this week for the KV LRT line extension: (i) Package A for the Kelana Jaya line (RM950m; Kelana Jaya-Summit) to TRC Synergy, and (ii) Package A for the Ampang line (RM635m) and the supply of segmental box girders (RM68m) to Bina Puri. The awards for the other parcels are expected to run into 2011. Meanwhile, a new 3rd LRT line (Kota Damansara-city centre) is in the works, which could be the revival of the Kota Damansara-Cheras line pursued earlier by MRCB. This was put on the back-burner as it will run parallel to the MRT line at some stretches. UEM and IJM may have teamed up for a slice of the jobs.