- In this report, we strive to identify the potential beneficiaries of Klang Valley’s second MRT line, if implemented. MRT Corp revealed that the Federal government has approved the second MRT link, which would probably link Sg.Buloh with Putrajaya. MRT Corp is waiting for an official announcement before it can commence work on this new line.

- Construction works on the underground section of the Sg.Buloh-Kajang line (MR1) have reached the halfway mark, with basic construction works to be ready by mid-2015, followed by upgrading works on the operations systems.

- We therefore believe that the MRT Line 2 could be endorsed soon to ensure there are no construction overlaps between Line 1 and 2. The first line is scheduled to be completed by July 2017.

- This is positive news for the construction sector in general, as the imminent roll-out of MRT Line 2 would cascade down the local construction supply chain.

- Based on initial ground checks, MRT Line 2 could cost roughly the same as that of MRT Line 1, which is estimated at ~ RM24bil. The total length for MRT Line 2 (Sg.Buloh-Serdang-Putrajaya) is roughly 56km, with 11km being underground. There would also be a total of 35 stations for this new line (underground – eight, elevated – 27).

- Given its earlier track record as the Project Delivery Partner (PDP) for MRT Line 1, we see MMC-Gamuda JV as the front-runner for a similar role under MRT Line 2, which could be awarded soon after its official endorsement.

- Similarly, we believe that the MMC-Gamuda JV is in the driver’s seat for the tunnelling portion. It has the advantage of re-deploying its tunnel boring machines for MRT Line 2, once works on MRT Line 1 are completed.

- Apart from the PDP contract, we expect other work packages to be tendered out by 2H 2015 after obtaining feedback from relevant stakeholders.

- While it is a little premature to gauge the possible winners for the elevated portions, we see building material suppliers such as Ann Joo Resources, Lion Industries and Lafarge Malayan Cement as beneficiaries of multi-year demand.

- Likewise, Kim Lun and Pintaras Jaya are poised for possible jobs due to their select strengths in manufacturing tunnel lining segments/segmental box girders and piling works, respectively.

Source: AmeSecurities