- 11MP – What to expect? Under Budget 2015 – the final year of the outgoing 10th Malaysia Plan (10MP) – overall development expenditure was c.19% higher YoY at RM50bil (including c.RM2bil for contingencies). Total development expenditure allocated at the start of the 10MP was ~RM230bil. For the upcoming 11MP, we believe the new allocation has to be balanced against the government’s fiscal objectives – i.e. 2015 fiscal deficit target of 3% and a balanced budget by 2020 – amid a weaker MYR and lower oil revenues.
- Impetus will likely come from the reaffirmation of key projects highlighted during Budget 2015: Our channel checks indicate that while it is unlikely for any major new infrastructure jobs to be announced under 11MP, sentiments for Malaysian contractors will still be lifted by the reaffirmation of several catalytic projects announced under Budget 2015 last October. Key cornerstone projects to look out for include:-
(1) MRT2 (RM23bil): The second Klang Valley MRT line (56km) will link Sg.Buloh and Selayang. While there was a delay (due to plans to incorporate a station in Bandar Malaysia), we still expect major work packages to be dished out from mid-2016 onwards. This implies that tenders should be called by 4Q15. The Project Delivery Partner (PDP) role has been awarded to the MMC Corp-Gamuda JV (which undertook the same role for MRT1). This puts the JV in a strong position to secure the tunneling contract. Likewise, we also believe that Econpile is in a strong position to win upcoming piling works given its track record for MRT1, while Kimlun Corp may supply tunnel lining segment and segmental box girders for MRT2.
(2) Klang Valley LRT 3 (RM9bil): Along with MRT2, we believe the LRT 3 line (Bandar Utama-Shah Alam-Klang) will be among several key public transportation projects that will gain prominence under the 11MP. Earlier press report suggests that six shortlisted candidates – (i) an MMC-Gamuda JV; (ii) a tie-up between Malaysian Resources Corp (MRCB) and George Kent; (iii) UEM Group; (iv) Naza TTDI-CSDR Zhushou JV; (v) Sunway; and (vi) WCTAlloy MTD Group – are in the running for the PDP role.
(3) West Coast Expressway (RM5bil): Appointed as the engineering, procurement and construction (EPC) contractor in January, IJM could still be in the running for the balance RM2.2bil worth of jobs after securing the first portion worth ~RM2.8bil. Equally, IJM may expand its current record RM7bil orderbook further via the Kuantan Port expansion project (RM3bil; Phase 1: ~RM1.8bil), after it had won a RM1.2bil contract to build a new deep water terminal at Kuantan Port. Notably, IJM owns a 60% stake in the Kuantan Port concession, as well as pockets of industrial land near the port.
(4) Pan Borneo Highway (RM27bil): The RM27bil highway – involving 1,663km of roads (Sarawak: 936km; Sabah: 727km) – was officially kicked-off late March. It is supposed to be a fast-track project that involves private sector participation. The stretch in Sarawak – costing ~RM15bil – will be toll-free and was reportedly awarded to Lebuhraya Borneo Utara. Works on the Sarawak portion is expected to be completed by 2023.Construction will begin with the 40km Tg.Datu-Sematan (by end-2018) and 740km Sematan-Miri (by 1Q 2023) stretches. While the exact funding structure is not immediately known, we reckon that Sarawak-based contractor Hock Seng Lee could be a key beneficiary as it has:- (i) a strong balance sheet that would enable the group to take on payment-in-kind jobs (e.g. land swap); and (ii) a niche in marine-engineering works, which comes in handy given the state’s hilly terrain.
(5) Other notable projects include the balance of works for the Langat 2 project and urban highways included in Budget 2015 (i.e. the RM5.3bil Sg.Besi-Ulu Kelang Expressway [SUKE], and RM4.2bil Damansara-Shah Alam Expressway). The status and timing for these projects remain unclear, although the Federal government recently reiterated its desire to proceed with Langat 2 despite the Selangor water impasse. Also, a proposed RM30bil East Coast Rail Line (620km from Tumpat to Kuantan Port) is on the cards. Feasibility studies for the latter were completed in 4Q14 but there has been no further updates since.
- Penang Transport Master Plan (PTMP): Beyond the scope of the 11MP, we highlight the Penang Transport Master Plan (PTMP) as another major infrastructure project to look out for in the coming months. Costing RM27bil (including over RM6bil that had already been awarded to the Zenith-BUCG for the Penang undersea tunnel and road bypass project), six parties have been shortlisted for the PDP role. They are Gamuda, IJM, WCT, Prasarana, Singapore-based CGC Group Pte Ltd, and two Hong Kong investors. The winning bidder could seal the contract by June with construction works commencing by 2016.
Source: AmeSecurities Research - 19 May 2015
Created by kiasutrader | Dec 08, 2015
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calvintaneng
Item No. 4
The Pan Borneo Highway. As can be clearly seen. At RM27 Billions The Bulk of 11MP Award will Go to East Malaysian States of Sabah & Sarawak. All the more crucial as April 2016 will be Sarawak State election.
Being BN "Fixed Deposit" State the Bulk of Award will go there. AmResearh has focus on HSL. HSL is more into coastal projects whereas NAIM & CMSB Are More Land Based Construction Builders. And no matter who win the Pan Borneo Highway - supply of Cement and cement aggregates come by way of CMSB. So CMSB should be preferred above HSL. Naim will also get the Lion Share of 11MP Award. And KKB Being Associate Co of CMSB also stand to gain.
What about Laggard Weida & Kbunai?
Weida is the expert for water and waste water projects. A RM400 millions water infrar works will be allotted.
And Kbunai?
In 10MP PM Najib specifically mentioned www.nexusresort.com by name. Kbunai was designated as one of 11MP ETP Projects.
The Pan Borneo Highway will also benefit Kbunai just as the Kulai Desaru Highway brought in more tourists.
LET'S SEE IN 2 DAYS' TIME. WHO WILL BE THE ULTIMATE WINNERS.
2015-05-19 10:42