Construction
Maintain overweight: Four traffic alleviation projects announced by the Penang government could drum up excitement over contractors and developers that already have exposure there, IJM Corp Bhd and Malaysian Resources Corp Bhd (MRCB) for example.
The proposed new infrastructure projects in Penang are not entirely new but the 2015 timing of their implementation is a surprise and a long-term positive for the construction sector. Maintain “overweight”.
The Edge Financial Daily reported the Penang government has proposed four traffic alleviation projects worth an estimated RM5 billion to RM8 billion, making it the state’s biggest infrastructure exercise.
Chief Minister Lim Guan Eng said the state government will pay the contractors via a competitive land swap deal. The prime land is located in the Gurney Drive tourist belt.
The projects are: (i) a 6.5km sea tunnel connecting Gurney Drive on the island to the northern side of Butterworth; (ii) a 4.2km road from Gurney Drive to the Tun Dr Lim Chong Eu expressway bypassing the city centre; (iii) a 4.6km road linking Bandar Baru Air Itam to the same expressway; and (iv) a 12km dual-carriage road from Tanjung Bungah to Teluk Bahang to pair with the existing coastal road.
The Penang government was to launch a notice of prequalification yesterday and hold a briefing in Penang on Nov 29 for interested bidders. The project will be open to local and foreign contractors. Construction is expected to start in 2015 and complete in 2020. The chief minister added that developers could propose to implement toll payments to recover costs.
We think the projects will be attractive to existing contractors and developers in the state. Within our coverage, IJM Corp and MRCB are among those that already have exposure to Penang.
Payment via land swap would provide a good landbanking opportunity. We view this as a good opportunity for WCT Bhd as it is in line with the group’s landbanking strategy and would expand its township expertise outside the Klang Valley.
Watch out for further news flow on Penang’s new infrastructure projects. There should be more visibility on the potential contenders and project structure in the coming months. This could be a catalyst for the sector, on top of the implementation of existing mega-jobs such as the Klang Valley MRT. — CIMB IB Research, Nov 15
This article appeared in The Edge Financial Daily, November 16, 2011.
Maintain overweight: Four traffic alleviation projects announced by the Penang government could drum up excitement over contractors and developers that already have exposure there, IJM Corp Bhd and Malaysian Resources Corp Bhd (MRCB) for example.
The proposed new infrastructure projects in Penang are not entirely new but the 2015 timing of their implementation is a surprise and a long-term positive for the construction sector. Maintain “overweight”.
The Edge Financial Daily reported the Penang government has proposed four traffic alleviation projects worth an estimated RM5 billion to RM8 billion, making it the state’s biggest infrastructure exercise.
Chief Minister Lim Guan Eng said the state government will pay the contractors via a competitive land swap deal. The prime land is located in the Gurney Drive tourist belt.
The projects are: (i) a 6.5km sea tunnel connecting Gurney Drive on the island to the northern side of Butterworth; (ii) a 4.2km road from Gurney Drive to the Tun Dr Lim Chong Eu expressway bypassing the city centre; (iii) a 4.6km road linking Bandar Baru Air Itam to the same expressway; and (iv) a 12km dual-carriage road from Tanjung Bungah to Teluk Bahang to pair with the existing coastal road.
The Penang government was to launch a notice of prequalification yesterday and hold a briefing in Penang on Nov 29 for interested bidders. The project will be open to local and foreign contractors. Construction is expected to start in 2015 and complete in 2020. The chief minister added that developers could propose to implement toll payments to recover costs.
We think the projects will be attractive to existing contractors and developers in the state. Within our coverage, IJM Corp and MRCB are among those that already have exposure to Penang.
Payment via land swap would provide a good landbanking opportunity. We view this as a good opportunity for WCT Bhd as it is in line with the group’s landbanking strategy and would expand its township expertise outside the Klang Valley.
Watch out for further news flow on Penang’s new infrastructure projects. There should be more visibility on the potential contenders and project structure in the coming months. This could be a catalyst for the sector, on top of the implementation of existing mega-jobs such as the Klang Valley MRT. — CIMB IB Research, Nov 15
This article appeared in The Edge Financial Daily, November 16, 2011.
