News: HSR Revival A Rerating Catalyst For Construction Sector

Dec 19, 2019

Analysts see the revival of high-speed rail (HSR) as a rerating catalyst for the construction sector, saying they are likely to turn bullish in the event something more concrete about the project turn up.

Recently, Prime Minister Tun Dr Mahathir Mohamad reportedly said that an HSR station will be included in the revived Bandar Malaysia project. But while Malaysia would push through with the HSR project, Tun Mahathir revealed that the government is mulling on the most suitable speed for the train.

Hong Leong Investment Bank Bhd’s research arm (HLIB Research) recapped that the project deliver partner roles have been awarded by the previous regime to Malaysian Resources Corporation Bhd (MRCB)-Gamuda Bhd joint venture (JV) for the northern portion, which runs from Bandar Malaysia station to Melaka station, and to YTL Corporation Bhd-TH Properties JV for the southern portion (Johor), reported The Borneo Post.

Read this guide on HSR and what it means for Malaysia!

“While we reckon previous PDP winners remain frontrunners to secure contracts, we believe IJM Corporation Bhd (IJM) and Sunway Construction Group Bhd (Sunway Construction) will emerge as stronger contenders this time around as both have strong financial capacity and should materially benefit from a shift towards an open tender system,” said HLIB Research.

It noted that the four-party consortium previously formed by Sunway Construction and IJM with Maltimur Resources Sdn Bhd and Jalinan Rejang Sdn Bhd was unsuccessful in the PDP tenders.

Although it is still too early to determine the potential work package winners, the research house expects the usual active construction players like IJM, WCT Holdings Bhd, Sunway Construction, TRC Synergy Bhd, Gabungan AQRS Bhd, Mudajaya Group Bhd, Ahmad Zaki Resources Bhd, Gadang Holdings Bhd and MRCB to actively bid for the project.

“The revival of HSR would serve as a rerating catalyst for the sector. We are likely to turn bullish should anything more concrete regarding the project turn up,” said HLIB Research.

“For the time being absent of further details and timeline clarity, we maintain our ‘neutral’ stance.”

 

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THEAN .
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Midas Properties
thean@midasproperties.com.my
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