Malaysia - Infrastructure Projects, Building Materials etc.

Re: Malaysia - Infrastructure Projects & Building Materials

Postby winston » Tue Apr 16, 2019 9:42 am

Optimism for the sector

We expect the ECRL revival to be positive on the sector.

Tun Daim was quoted as saying that 40% of the sub-contractors would be Malaysians (link); this implies MYR17.6b of works vs. e.MYR10b under the previous structure (1 of 8 main packages).

We await more details from the press conference on 15 Apr.

Contractors with experience in rail development such as Gamuda, IJM, Sunway Construction, WCT are potential beneficiaries of the civil engineering works.

From a construction materials perspective, Lafarge could benefit from the supply of cement
whilst Kimlun could benefit from supplying the precast components.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... 7ac293.pdf
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Re: Malaysia - Infrastructure Projects & Building Materials

Postby winston » Tue Apr 16, 2019 10:11 pm

Malaysia's steel industry seen benefiting from revived East Coast Rail link project

by Samuel Chin and Clement Choo

Singapore — Malaysia's construction steel industry is expected to benefit from the government's move to resume construction of the East Coast Rail link, local steelmakers said Tuesday.

The Malaysia Rail Link and China Communications Construction Company on April 12 signed a supplementary agreement to revive the project and set up a 50:50 joint venture company to manage and operate the rail network, the prime minister's office said Monday.

The railway project was suspended in July 2018 by the Pakatan Harapan government after it was elected on May 9 that year, citing high costs.

Under the new agreement, the cost of building the East Coast Rail Link is down 32.8% from Malaysian ringgit 65.5 billion ($15.9 billion) to MR 44 billion.

"Many will be eyeing the same pie," a domestic steelmaker said, noting that local participation will be limited to structural steel for civil works such as rebar and beams as there are no rail makers in Malaysia.

The bulk of demand is likely to come from construction of the 20 stations planned for the project.

Notably, domestic participation in the project has been raised to 40% of the civil works from 30% in the original deal signed in 2016. At MR 44 billion, there could a potential MR 17.6 billion payout for local mills.

The railway's demand for construction steel will boost Malaysia's steel industry, which has been sluggish since 2013, when demand stood at 10.05 million mt before falling to 9.44 million mt in 2017, data from the Malaysia Iron and Steel Industry Federation showed. The construction sector consumed about 70% of the 2017 total.

Malaysia's steel industry is dominated by long products, which meet about 67% of local demand, while 33% is met by imports, MISIF data showed.

With the special agreement in place, the East Coast Rail link will now span 640 km instead of 688 km, comprised of standard gauge and double tracking, the prime minister's office said.

"The new alignment will avoid the construction of the 17.8 km-long Genting Tunnel from Bentong to Gombak. It will provide a direct link from Kuantan Port to Port Klang to serve as a land bridge between the two ports," it said.

The Malaysian government expects to complete construction of the rail link by December 21, 2026, instead of June 30, 2024.

Source: S&P Global

https://www.spglobal.com/platts/en/mark ... nk-project
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Tue Apr 23, 2019 7:59 am

Payment woes for contractors

by Thean Lee Cheng

Source: The Star

https://www.thestar.com.my/business/bus ... OXUjaX5.99
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Tue Apr 23, 2019 8:09 am

Construction stocks rally on ECRL and Bandar Malaysia revival

by Intan Farhana Zainul

CIMB Research estimated the potential construction works value at between RM5bil and RM6bil based on the earlier estimated RM50bil to RM60bil gross development value assumption.

The number of affordable housing units in the project has doubled from 5,000 to 10,000, the potential beneficiaries are likely limited to smaller/medium-sized building contractors for which tenders could be competitive.

Public Investment Bank Bhd has identified construction giants such as Gamuda Bhd, IJM Corp
Bhd and WCT Holdings Bhd as likely beneficiaries of the Bandar Malaysia project.

“Specialist contractors such as Advancecon Holdings Bhd for earthworks, Econpile Holdings
Bhd and Pintaras Jaya Bhd for piling, and Lafarge and Tasek Corp Bhd could also be beneficiaries,” it said in a note to clients.

It has also identified Malaysian Resources Corp Bhd as a beneficiary for the transportation portion and MMC Corp Bhd for the potential revival of the Bandar Malaysia MRT 2 underground stations.


Source: The Star

https://www.thestar.com.my/business/bus ... F1UiUt8.99
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Fri Apr 26, 2019 10:27 am

Construction

Signs of pump-priming making a comeback

Pump-priming is showing signs of recovery, mainly due to bilaterally-driven projects with China. ECRL could restart sector job awards.

We would be more bullish on Bandar Malaysia if the KL-Singapore HSR is reinstated. Funding would be the main hurdle for the HSR, in our view.

Rail contractor’s share prices have gained 49% YTD. We still believe that positives are largely priced in, pending new details on tenders.

We upgrade the sector to Neutral with new rail jobs (HSR and MRT 3) as upside risks.

Upgrade WCT to Add; we retain Add on Muhibbah Engineering.

Source: CIMB

https://brokingrfs.cimb.com/Fz14DYITY0u ... AyaCQ2.pdf
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Thu May 09, 2019 8:56 am

Building Materials – Malaysia

Steel Prices Up But Demand Still Very Weak

Local steel prices rose for the second consecutive month in Apr 19.

While the ASP improvement was driven by the cost-push factor and anticipation of the revival
of mega and infrastructure projects, we believe earnings would remain lacklustre in the absence of demand.

We expect steel demand to remain soft and a gradual recovery could only be possible by end-19.

Maintain UNDERWEIGHT until clear catalysts emerge.

Source: UOBKH

https://research.uobkayhian.com/content ... 361de6c9c6
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Fri Jun 14, 2019 9:27 am

Building Materials – Malaysia

Expecting Too Much

The surge in share prices of cement companies amid speculation of cement prices rising by up to RM80/tonne (40%) is unwarranted as demand is unlikely to firm up enough to sustain such ASP even with mega projects’ roll-out factored in.

For steel, we do not rule out possible industry M&As but for now, the outlook may remain unexciting (ie weak demand, higher raw materials cost and escalating trade tension).

Maintain UNDERWEIGHT in the absence of compelling catalysts.

Source: UOBKH

https://research.uobkayhian.com/content ... 41f3026121
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Thu Aug 08, 2019 7:20 am

Affin Hwang Research upgrades construction sector to overweight

KUALA LUMPUR: Affin Hwang Capital Research has upgraded the construction sector from Neutral to Overweight as Malaysia Rail Link Sdn Bhd (MRL) will call for tenders for the RM44bil East Coast Rail Link (ECRL) project civil works in 4Q19.

It said on Wednesday more infrastructure projects are likely to be revived. It expects infrastructure spending to accelerate in 2020 to support GDP growth.

“We upgrade Gamuda to BUY from Hold as a large-cap sector proxy. AQRS, HSS and SCGB are our top small and mid-cap sector BUYs," it said.

To recap, MRL said 331 Malaysian construction companies were shortlisted as potential tenderers for the ECRL civil packages, ie, 25% out of 1, 321 companies that submitted applications for pre-qualification.

All shortlisted companies are expected to be notified in writing before end-August 2019 by main contractor China Communications Construction Company Ltd (CCCC).

Affin Hwang Research said most of the contractors under it coverage are likely to be pre-qualified.

“We gather that AQRS, Pintaras Jaya, WCT Holdings, WZ Satu, Sunway Construction have been pre-qualified to tender for ECRL subcontract works among the companies under our coverage.

“We believe IJM Corp and MALAYSIAN RESOURCES CORP are likely to be pre-qualified given their established track records. We believe AQRS, SCGB, MRC, WCT and IJM could win civil packages for the ECRL, ” it said.

The research house said tender packages will be issued for 40% of the civil works (excluding tunnel works) and would first involve the 223-km stretch (out of a total length of 640 km) from Dungun to Mentakab where the rail alignment had been finalised.

It also pointed out the Penang Transport Master Plan (PTMP) has been revived with the federal government’s approval of the RM7.5bil 19.5-km Pan Island Link 1 (PIL2), RM8.4bil 29.5-km Light Rail Transit (LRT) and Penang South Reclamation (PSR) components.

Other large-scale infrastructure projects that could be revived in 2020 include the Klang Valley MRT Line 3 (MRT3) and Kuala Lumpur-Singapore High Speed Rail (KL-SG HSR) following a review to cut the project cost.

The KL-SG Rapid Transit System (RTS), Johor Bus Rapid Transit (BRT) and Labuan Bridge are also being considered for implementation.

“The construction sector real GDP growth has outpaced Malaysian GDP growth in most years post-Global Financial Crisis, except 2011 and 2018 due to domestic political uncertainties.

“We expect the trend to resume with government pump-priming via infrastructure spending to support GDP growth in 2020, given rising external risks. We believe the positive news flow will sustain the upward rerating of the construction sector and upgrade our call to Overweight from Neutral. Top Buys are AQRS, Gamuda, SunCon and HSS, ” it said.

Source: The Star

https://www.thestar.com.my/business/bus ... XkkwQfe.99
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Fri Sep 06, 2019 10:38 am

Raining Still, Hoping For Sunshine

Almost half of the construction companies under our coverage missed earnings expectations, dragged by a common denominator - the delay of LRT3 works and weak property performances.

However, earnings recoveries are expected from a gradual pick-up in LRT3 work progress in 2H19 coupled with existing billings from current orderbooks.

Meanwhile, selected mid-cap companies under our coverage are expected to benefit from the roll-out of mega projects.

Maintain MARKET WEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... aa6b9feeba
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Re: Malaysia - Infrastructure Projects, Building Materials e

Postby winston » Wed Sep 11, 2019 9:38 am

Building Materials – Malaysia

Positive Bias On Cement Segment

We remain positive on the recovery of the cement segment following industry consolidation. Even though cement prices have yet to be revised, we have seen a significant drop in Lafarge’s operating cost post YTL acquisition, which signals further positive upside.

Meanwhile, the steel segment may continue its underperformance in the absence of construction activities as well as excess supply.

Maintain MARKET WEIGHT until clear catalysts emerge.

Source: UOBKH

https://research.uobkayhian.com/content ... 6361167d8f
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