Construction Sector - High-speed rail link nod OVERWEIGHT

kiasutrader

Publish date: Wed, 20 Feb 2013, 10:49 AM

- The Star reported that Malaysia and Singapore have agreed to build a high-speed rail (HSR) link between both countries. The link will reduce travelling time between KL and Singapore to only 90 minutes as opposed to roughly four hours by driving and seven hours on the train. The target is to complete the rail link by 2020.

- Plans for the HSR project was first mooted by the YTL Group back in the late 1990s but was repeatedly shelved due to the high cost involved in the aftermath of the 1997/1998 Asian financial crisis.

- Then in September 2010, Prime Minister Datuk Seri Najib Razak announced that the project was back in consideration as one of several high-impact projects under the Malaysian government's Economic Transformation Programme (ETP).

- The HSR is seen as a vital cog that can further boost the connectivity within Iskandar Malaysia. However, key details such as the projected cost and exact alignment have yet to be revealed.

- While suitors are aplenty, we reckon that the YTL group - as one of the project's earlier proponents - could still be in the running. We also see select contractors with either prior track record or requisite strengths to potentially benefit from the project.

- They would include IJM Corp, WCT and MRCB. We are however unsure if Gamuda would be in the running, given that the group - along with MMC - already have their hands full with the Sg.BulohKajang (SBK) MRT line and remain strong contenders for another two new MRT lines (likely to be approved by end-1H13).

- Moving down, the flight of rail jobs could trigger a multi-year kick to the providers of building material products; i.e. Ann Joo Resources, Lion Industries, Lafarge Malayan Cement. IJM (via ICP) and KimLun Corp.

- Apart from the HSR link, both Najib and his Singaporean counterpart Lee Hsien Loong have also agreed on a rapid transit system (RTS) linking Singapore's Mass Rapid Transit system with Johor Bahru.

- The rail projects are in addition to several other investments made by Singapore into Johor. These include:- (i) two wellness projects in Medini (Afiniti Medini and Avira Wellness); (ii) an RM8bil mixed development JV between Iskandar Waterfront Holdings (IWH), Capitaland and Temasek at Danga Bay; (iii) as well as the opening of a new Customs, Immigration and Quarantine (CIQ) checkpoint at Puteri Harbour.

- Across the causeway, M+S Pte Ltd - a pact between Khazanah Nasional and Temasek - would spearhead the Marine One project at the heart of Singapore's new central business district (CBD).

- Taken together, we expect the HSR project to be among a few key infrastructure projects that will likely gain traction after the 13^th General Election.

Source: AmeSecurities

Discussions

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Jonathan Keung

good business sense but politically sensitive on the HSR link between Singapore and Kuala Lumpur. Need to wait for details after GE13

2013-02-20 15:34

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