Prasarana  Group  Managing  Director  Azmi  Abdul  Aziz  said  Prasarana  is looking  to  start  the  construction  of  the  RM9bn  Light  Rail  Transit  Line  3 (LRT3)  project  by  1Q16  and  completed  by  31  August  2020.  Seven companies have collected the documents but there is no submission yet by potential  Project  Delivery  Partners  (PDP)  for  the  project.  The  submission deadline is by the first week of June. The successful bidder is expected to be  announced  in  July.  The  final  cost  and  alignment  of  the  project  will  be determined after a public display to obtain feedback between 15 May and 14 August at selected locations.  (The Edge Financial Daily).

Comments:  Confirmation  that  progress  is  being  made  to  implement  the LRT3  project  is  positive  for  the  construction  sector  as  this  is  one  of  the large-scale  infrastructure  projects  that  is  slated  to  be  awarded  this  year. However, there could be risks that implementation of the project could be delayed if disputes arise on the planned alignment of the 35km line linking Bandar Utama to Johan Setia in Klang.

We  gather  that  MMC-Gamuda  JV,  MRCB-George  Kent  JV,  UEM  Group, Naza TTDI, Sunway and WCT-AlloyMTD Group JV are interested to bid for the  PDP  role  for  the  LRT3  project.  We  believe  MRCB-George  Kent  JV (good  political  links)  and  Sunway  (strong  rail  construction  track  record) could emerge as frontrunners to win the project. MMC-Gamuda may not be as aggressive in pursuing this project given its burgeoning order book after being appointed the PDP for the RM25bn Klang Valley Mass Rapid Transit Line 2 project.

We reiterate our Overweight call on the construction sector and BUY calls on Sunway, MRCB and WCT and HOLD call on Gamuda.

Source: Affin Hwang Capital Research - 13 May 2015