- The Star reported that construction works on the RM23bil Mass Rapid Transit Line 2 (MRT 2) are due to be awarded from 4Q14 onwards.

- While details are still being finalised, the second Klang Valley MRT line will link up Sg.Buloh and Putrajaya (via Serdang).

- The project’s groundbreaking ceremony should be executed by the first quarter of 2016.

- Indeed, the pre-qualification exercise to shortlist the prospective bidders will commence from the third quarter of 2015 onwards.

- The bidders will be screened based on technical know-how as well as financial standing.

- From our channel checks, the rollout of the MRT 2 line is believed to have been pushed-back by ~three to six months as some changes had to be made within the route’s southern path to incorporate the new Bandar Malaysia station.

- While we opine that existing contractors for the MRT 1 line works could have the slight edge to secure jobs for the MRT 2 line, we believe competition will likely remain keen.

- We nevertheless believe that the major work packages such as the tunnelling contracts, will only be dished out from mid-2016 onwards and ahead of the project’s completion in 1H of 2022.

- For now, we believe the MMC-Gamuda JV are firm candidates for the tunnelling portion of the MRT 2 line, having bagged the PDP role with the contract set to be signed by mid-2015.

- The JV is also the PDP and tunnelling contractors for MRT 1 line, and has the added advantage of redeploying its existing ten sets of tunnel boring machines (TBM) for the upcoming MRT line bids.

- In addition, we understand that it is the only local contractor that is qualified to tender for the underground works package based on track record.

- Likewise, the building material players – i.e. Lafarge Malaysia, Ann Joo Resources and Lion Industries – could see renewed multi-year order flows when construction works accelerate.

- Along with the Klang LRT 3 project, the MRT 2 project should galvanise newsflow momentum for Malaysian contractors moving into 2Q15. The unveiling of the 11th Malaysia Plan (11MP) later this year should also provide fresh orderbook prospects for Malaysian contractors.

Source: AmeSecurities