Construction sector
Recommend overweight: The Edge Financial Daily reported that five companies have pre-qualified for the Klang Valley mass rapid transit (MRT) tunnelling contract. Tender documents were to be given out on Friday.
The MMC-Gamuda JV are the only local parties that have been pre-qualified. The other parties are China’s Sinohydro Group Ltd, South Korea’s SK Holdings as well as two other contenders from Japan and China. The financial daily also reported that other Malaysian companies which had earlier expressed interest were IJM Corp Bhd and UEM Group.
The final bidders shortlisted for this job are given three months to make their submissions for the contract. The tunnelling works form the single largest component of the Sungai Buloh-Kajang MRT line reportedly to cost about RM20 billion. The tunnelling portion is estimated at RM7 billion.
We are not surprised by this news. Following submissions by year-end, we expect the crystallisation of the tunnelling award in March or April next year.
We believe the MMC-Gamuda JV stands a strong chance of bidding for this job. Apart from being involved in the submission of the original MRT route, the JV has also been accorded a first right of refusal option to match competing bids under a “Swiss Challenge”.
Furthermore, we understand that the JV — having 50% bumiputera equity representation — would have up to 7.5% price advantage compared with 2.5% and 5% for other bidders, depending on the level of Malaysian participation in the various consortiums. But, we believe bidding margins may be more competitive than earlier envisaged. Machinery and equipment form a large chunk of tunnelling works. Our survey has revealed that Sinohydro could well emerge as a main competitor for the MMC-Gamuda JV.
We gather that the Chinese parties will likely use their own machinery at one third the cost of that from Germany that the MMC-Gamuda JV is reportedly to be considering.
In any case, we believe that the excitement surrounding the MRT tunnelling contract has been largely priced in for Gamuda.
Instead, we reckon investor attention would probably gravitate to identifying the proxies for the elevated packages worth a combined RM12 billion. We understand that tenders for the first package linking Taman-Maluri to Plaza Pheonix are out. Based on track record, major contenders could include IJM Corp, UEM Group, Malaysian Resources Corp Bhd, WCT Bhd and Loh & Loh Corp Bhd. — AmResearch, Oct 21
This article appeared in The Edge Financial Daily, October 24, 2011.
Recommend overweight: The Edge Financial Daily reported that five companies have pre-qualified for the Klang Valley mass rapid transit (MRT) tunnelling contract. Tender documents were to be given out on Friday.
The MMC-Gamuda JV are the only local parties that have been pre-qualified. The other parties are China’s Sinohydro Group Ltd, South Korea’s SK Holdings as well as two other contenders from Japan and China. The financial daily also reported that other Malaysian companies which had earlier expressed interest were IJM Corp Bhd and UEM Group.
The final bidders shortlisted for this job are given three months to make their submissions for the contract. The tunnelling works form the single largest component of the Sungai Buloh-Kajang MRT line reportedly to cost about RM20 billion. The tunnelling portion is estimated at RM7 billion.
We are not surprised by this news. Following submissions by year-end, we expect the crystallisation of the tunnelling award in March or April next year.
We believe the MMC-Gamuda JV stands a strong chance of bidding for this job. Apart from being involved in the submission of the original MRT route, the JV has also been accorded a first right of refusal option to match competing bids under a “Swiss Challenge”.
Furthermore, we understand that the JV — having 50% bumiputera equity representation — would have up to 7.5% price advantage compared with 2.5% and 5% for other bidders, depending on the level of Malaysian participation in the various consortiums. But, we believe bidding margins may be more competitive than earlier envisaged. Machinery and equipment form a large chunk of tunnelling works. Our survey has revealed that Sinohydro could well emerge as a main competitor for the MMC-Gamuda JV.
We gather that the Chinese parties will likely use their own machinery at one third the cost of that from Germany that the MMC-Gamuda JV is reportedly to be considering.
In any case, we believe that the excitement surrounding the MRT tunnelling contract has been largely priced in for Gamuda.
Instead, we reckon investor attention would probably gravitate to identifying the proxies for the elevated packages worth a combined RM12 billion. We understand that tenders for the first package linking Taman-Maluri to Plaza Pheonix are out. Based on track record, major contenders could include IJM Corp, UEM Group, Malaysian Resources Corp Bhd, WCT Bhd and Loh & Loh Corp Bhd. — AmResearch, Oct 21
This article appeared in The Edge Financial Daily, October 24, 2011.
