- The Star reported that feasibility studies for a third LRT line in the Klang Valley is nearing completion. Once the studies by Syarikat Prasarana Negara Bhd (SPNB) are completed, they would be presented to the relevant authorities for approval.

- The estimate cost that has been bandied around is between RM8bil and RM9bil, or c.RM230mil/km. Based on our checks, this new line is to measure between 30km and 34km in length with a targeted ridership of 22k passengers/hour/direction.

- This new line would link Kelana Jaya to Klang via Shah Alam. It comes after SPNB’s ongoing extension of the Kelana Jaya and Ampang lines totalling c.RM7bil that is set to be fully completed by June 2015.

- The Kelana Jaya line (17km) extension would see passenger capacity increase to 98k during peak hours; the Ampang line’s (17.7km) passenger capacity would increase to 79,800.

- Meanwhile, some of the main stations being touted for LRT3 include Glenmarie, Stadium Shah Alam, i-City, UiTM, Bandar Baru Klang, South Port and Bandar Sultan Sulaiman.

- Overall, we believe that the LRT3 is being designed to tap into the growing transportation needs and populace within the Klang/Shah Alam corridor. As at 2010, Shah Alam has a total population of 216k, while Klang has 909,500.

- In comparison, the Sg.Buloh-Kajang MRT project by MRT Corp (31 stations) has an estimated population corridor of c.1.2 million.

- With the spotlight on the upcoming MRT2 and 3 lines, the LRT3 has strengthened our view that public-transport infrastructure (especially rail) would be prioritised going forward. This comes ahead of the government’s potential moves to either drop or reschedule projects that have high impact content and low multiplier effects.

- This is positive for Malaysian contractors in general, where local expertise is building up within the civil components of the ongoing Ampang/Kelana Jaya line extensions as well as the SBK MRT line.

- Gamuda and IJM Corp remain our top picks ahead of a resumption of select infrastructure projects post Budget-2014 this Friday, with rail projects taking on a significant role. Our other BUYs within the sector are WCT, KimLun Corp, Benalec, Sarawak Cable, HSL and KKB Engineering.

- Likewise, this would prod a multi-year consumption of building mate.

Source: AmeSecurities