BlueRock Investment
SIME PROPERTY AND GAMUDA – BENEFICIARIES OF ECRL REROUTING (Part 1)
SIME PROPERTY AND GAMUDA – BENEFICIARIES OF ECRL REROUTING
The negotiation on ECRL (East Coast Rail Link) Project is ongoing now between Malaysia and China. Announcement on the outcome of the negotiation will be announced within this week or next week. It is highly expected that the project will be revived with reduced scope and China agreeing to some terms and conditions. It will be a win-win situation for both the countries.
Our Finance Minister, Mr. Lim Guan Eng has hinted two days ago, 6/4/2019 that ECRL will be rerouted to the southern part of Kuala Lumpur and it is going through part of Negeri Sembilan. Below is the map of the new routing of ECRL. Two companies will be greatly benefitted from this change. There are Gamuda and Sime Property.
Fig 1 : Development Land Along The New ECRL Rail Routes
The following are the development land along the New ECRL Rail Routes
Sime 1 – Carey Island (Sime Property has 11,000ha land. The 3rd Klang Port with development value of
RM200bil will be built. Theme park, golf course, township and a seafront city are also proposed)
Sime 2 – Serenia City (1,775 acres development that includes Xiamen University and KLIO (Kuala Lumpur
International Outlet). The launched phases of landed properties are selling very well.)
Sime 3 – Nilai Impian (1,809 acres matured township. Future launches will be on commercial and high
end residential units)
Sime 4 – Labu (Malaysia Vision Valley with aviation hub. It will house a high speed rail station. Land size
at 8,793 acres)
Gamuda – Gamuda Cove (1,530 acres township project that feature tram system within the township.)
Sime Property will have 4 pieces of huge land, namely Carey Island, Serenia City, Nilai Impian and Labu situated along the rail route. These projects will be greatly benefitted once ECRL is completed in a few years time. Knowing the construction speed of Chinese contractor, ECRL will be completed faster if the project were to be awarded to local contractors.
Gamuda has a project situated along the new route. Gamuda Cove is a new intelligent city with tram system under development now. The city will have a soon to be opened Discovery Park and future theme park.
Fig 2 : Clearer Picture Of New ECRL Routing
Conclusion :
The share price of Gamuda has moved from the lowest for the last 3 months at RM2.62 to RM3.25 on 8/4/19. On the other hand, Sime Property has moved rangebound between RM1.00 to RM1.19 for the last 3 months. It was closed at RM1.13 on 8/4/19. Comparing the two, Gamuda has moved quite a bit with further upside, whereas Sime Property is a laggard. I strongly recommend a “BUY” on Sime Property and it will trade upwards in short and medium terms with the revival of the ECRL project.
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Discussions
1 person likes this. Showing 13 of 13 comments
Haha...
Instead of going to Port Klang, it is going to Malaka Gateway.
Could it be one of the conditions CCCCCCCCCCC agrees to renegotiate ?????????????????
2019-04-09 12:36
According to Lim Guan Eng, the northern route through Gombak will cut across the 16km-long Klang Gates Quartz Ridge. The Selangor Government is currently lobbying for the Quartz Ridge to be gazetted as a Unesco World Heritage Site. Therefore, the southern route is a better option.
2019-04-09 13:02
It is still going to Port Klang. In fact, this is a better option as it is passing through the more developed and high growth area of the Southern Corridor. It ends in the proposed RM200bil Third Klang Port in Carey Island.
2019-04-09 13:09
Sime Property's Carey Island will be a hotspot for Klang Valley development. With now the ECRL rerouted and ended in Carey Island (or the starting point of ECRL if we go from west to east). This RM60bil ECRL project will drive and propel the growth of Carey Island. Sime Property has 11,000ha landbank in Carey Island. Any RM10 per square foot increase in the land price will translate to a profit of RM11.84bil or RM1.74 per share. A RM20 per square foot increase in land price will translate into a profit of RM3.48 per share. Compare this to this price of RM1.15 now.
2019-04-09 23:08
Sime Property's Carey Island is connected with South Klang Valley Expressway (SKVE). Therefore, the infrastructure is good and the expressway will connect Carey Island to Elite Highway, Maju Expressway, Besraya Highway and Kuala Lumpur - Seremban Highway. In the future, it will also be linked to West Coast Expressway once WCE is completed. The accessibility and infrastructure are superb and they will be further enhanced by ECRL.
2019-04-10 00:24
KL-Singapore high speed rail will have a hub in Labu. The distance between Labu and KL is actually about 48km.
2019-04-10 09:45
@kingsleytiu, agree with you. Nilai Impian and Labu will be the new commercial centre in that region.
2019-04-10 13:01
11000 hectares of landbank in Carey island? How come the total landbank stated in the annual report is only about 20,000 acres? Which one is correct?
2019-05-15 19:23
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Sami_Value
What is the rationale of the rerouting ? no reason of rerouting = tunggu masa la
The original intention of ECRL is to cut the travelling time from East Coast to Port Klang to by-pass Singapore, giving similar effect to compete with the Kra Canal proposal. You pusing sana, pusing sini, end up a screwing up the original plan intended.
If really materialize & not political cock talking to bait votes, Matrix Concept should benefits.
2019-04-09 11:56