Malaysia - Infra Projects, Building Materials etc

Re: Malaysia - Infrastructure Projects

Postby winston » Sat Jan 19, 2019 7:16 am

New LRT3 contract to be signed soon

by Gurmeet Kaur

PETALING JAYA: The new contract for the light rail transit 3 (LRT3) project is expected to be sealed before Chinese New Year.

According to the project’s main contractor, MRCB-George Kent Sdn Bhd (MRCBGK), unpaid contractors are also slated to receive their outstanding payments by the month’s end.

Prasarana, which is the project owner of LRT3, has not paid the sub-contractors for work done since February last year.

The cumulative amount owed is believed to be over RM1bil if claims up to December last year are taken into account, sources said.

As to when the new contract between Prasarana and MRCBGK will be signed, Hwang said he is “hoping to finalise and sign a new agreement by the end of this month”.

The agreement, to be restructured from a project-delivery-partner (PDP) model to a “fixed-price contract”, was supposed to be executed by Dec 12, 2018, based on a Bursa Malaysia filing.

Hwang explained that the signing was extended to this month since December was a festive season and many employees were not available.

Work on LRT3, which runs from Bandar Utama to Klang, slowed down in October last year, pending the signing of a new contract following a review of the project by the Pakatan Harapan government.

Sources said MRCBGK and the WPCs had collectively wrote to Prasarana last week to raise their concerns on the arrears of payment due.

It is understood that the certified payments outstanding to WPCs amounted to about RM800mil up to September 2018.

Sources said there is approximately another RM300mil of uncertified payment claims for the three-month period of October to December last year.

This brings the total amount owed to contractors to about RM1.1bil. However, it is uncertain whether Prasarana will pay out this total amount.

Moving forward, industry players reckon that it would take another two to three months before work on the 37km LRT3 resumes.

“Once a new contract is inked, the sub-contractors will then go to the banks for financing. For now, the credit lines have stopped,” said an industry source.

In July last year, the government approved the continuation of the 36km-long track at a final cost that was reduced by 47% to RM16.63bil. The government said it would do away with the PDP model and revert to the turnkey model, while the completion date was extended from 2020 to 2024.

Besides the joint venture of MRCB and George Kent as the main contractor, other listed companies that were involved in the project include Mudajaya Group Bhd, WCT Holdings Bhd, IJM Corp Bhd and Sunway Construction Group Bhd.

Source: The Star

https://www.thestar.com.my/business/bus ... rIomUvf.99
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Re: Malaysia - Infrastructure Projects

Postby winston » Tue Feb 05, 2019 9:07 am

Cautious view on construction

PETALING JAYA: CIMB Equities Research is underweight on the construction sector, following uncertainties over the East Coast Rail Link (ECRL).

“We believe opportunities for local contractors could still be limited if the funding from Exim Bank and the engineering, procurement, construction and commissioning (EPCC) structure is unchanged, more so if the overall project is downsized significantly. Maintain sector underweight,” it said in its latest report.

Firstly, negotiations on whether to terminate/cancel, proceed on the existing scope or on a smaller-scale version of the ECRL project have been challenging, given the bilateral issues involved, and the fact that the project was suspended at a 14% completion rate.

“If the project is allowed to proceed without downsizing, the interest portion on the updated RM66.8bil construction cost as derived by the Finance Ministry (MoF) is significant, even with the competitive 3.25% interest rate on the loan from Exim Bank of China (with an additional seven-year repayment moratorium based on the original 20-year loan agreement),” it said.

CIMB Research said on the other extreme, if the project is terminated, the immediate financial impact on the Malaysian government is the compensation to be paid to China Communications Construction Co Ltd or CCCC (the EPCC contractor), which would typically be dictated by the termination clause of the EPCC contract.

In terms of what has been paid, the MoF had indicated previously that RM20bil had been drawn down from Exim Bank (as at April 2018), of which RM10.2bil has been paid as advance payment to CCCC (15.2% of construction cost) and RM9.7bil for the actual progress payment as at July 2018.

Source: The Star

https://www.thestar.com.my/business/bus ... lLOKEYZ.99
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Re: Malaysia - Infrastructure Projects

Postby winston » Fri Feb 15, 2019 7:41 am

LRT3 project to resume in 2H

by Intan Farhana Zainul

PETALING JAYA: Works on the light rail transit 3 (LRT3) project are expected to resume in the second half of this year, according to Malaysian Resources Corp Bhd (MRCB).

“The LRT 3 project is already 10% completed and we are at the redesigning stage,” MRCB chief operating officer Kwan Joon Hoe told reporters after the group EGM on Thursday.

The LRT 3 project has been stalled for almost a year pending a review in light of the revelation by the Finance Ministry (MoF) that the total cost of the line had ballooned to RM31.65bil.

The government then approved the continuation of the 36km-long track at a reduced final cost of RM16.63bil, less 47% of the original cost.

This resulted in a series of negotiations between the MoF, Prasarana Malaysia Bhd and the project's main contractors MRCB and George Kent (Malaysia) Bhd.

On Jan 25, MRCB-George Kent Sdn Bhd entered into a fixed-price contract with Prasarana, the project owner, instead of adopting a project-delivery-partner (PDP) model.

Kwan said the overall LRT 3 project is now valued at RM11.8bil and is expected to be completed in 2024.

Source: The Star

https://www.thestar.com.my/business/bus ... XyLQbIO.99
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Re: Malaysia - Infrastructure Projects

Postby winston » Wed Feb 20, 2019 7:16 am

Malaysia nearing deal with China to revive scrapped ECRL, reports Bloomberg

KUALA LUMPUR (Bloomberg): Malaysia is making progress in talks with China to revive a high-speed rail project that Prime Minister Tun Dr Mahathir Mohamad's government said it would cancel, according to Foreign Minister Datuk Saifuddin Abdullah.

China is willing to reduce the US$20bil (RM81.72bil) price tag for the East Coast Rail Link project and talks are "in the last mile," Saifuddin said in an interview Tuesday (Feb 19) at his office near Kuala Lumpur.

Discussions have been led by Tun Daim Zainuddin, an adviser to Dr Mahathir, with the aim of reaching a smaller project size and cost, he said.

"It is not cancelled until and unless we can't settle on the numbers.

"China understands our constraint and they're willing to scale down the size of the project and the cost. The discussion is probably in the last mile," Saifuddin said.

Besides the railway, he has also cancelled a gas pipeline project backed by China, criticised foreign ownership in a housing development marketed to Chinese investors, and warned against "a new version of colonialism" on a trip to Beijing.

China's state-run Global Times newspaper last year blasted Dr Mahathir's "piercing" remarks, saying they "will definitely make Chinese investors worry about Malaysian public opinion and whether such an atmosphere will affect investment in the country."

There are recent signs that Malaysia wants to ease tensions with China.

Dr Mahathir struck a conciliatory tone last month and said the government cancelled the rail project only due to cost, leading to renewed talks.

Members of the Cabinet have declined to confirm or deny a Wall Street Journal report that said senior Chinese leaders offered Dr Mahathir's predecessor help bailing out troubled state fund 1MDB in exchange for stakes in projects.

Source: Bloomberg

https://www.thestar.com.my/news/nation/ ... LXZoscg.99
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Re: Malaysia - Infrastructure Projects

Postby winston » Fri Feb 22, 2019 8:11 am

Malaysian building material firms,contractors to gain from ECRL revival

UOBKH: “If the ECRL project works resumed, steel and cement companies would be able to see an earnings uplift”.


UOB Kay Hian named Gabungan AQRS Bhd as one of the key beneficiaries of the potential revival of the ECRL. It noted that AQRS had previously tendered for three packages along the stretch in Kuantan with a tender value of RM2.5bil.

“We strongly believe AQRS is one of the clear beneficiaries on the back of a longstanding relationship with the main contractor, China Communications Construction Company, and the tendered rail line alignment packages, which are adjacent to the state administrative centre (in Kuantan) which is currently being constructed by AQRS,” UOB Kay Hian explained.


Other potential winners, it said, would include Sunway Construction Group Bhd, IJM Corp Bhd, Malaysian Resources Corp Bhd and WCT Holdings Bhd, given their proven track records for the construction of rail-work jobs.

As for building material companies, if the project still largely involved elevated structures, steel companies such as Ann Joo Resources Bhd would be a key beneficiary, UOB Kay Hian said.

Otherwise, cement companies such as Lafarge Malaysia Bhd, YTL Cement Bhd and Hume Industries Bhd would benefit from sub-structure works, while other players such as Prestar Resources Bhd could benefit from guardrail works as it commands a 50% market share in the local guardrail business.


Source: The Star

https://www.thestar.com.my/business/bus ... W90bQSo.99
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Re: Malaysia - Infrastructure Projects

Postby winston » Sat Feb 23, 2019 10:14 am

Construction of SUKE, DASH to be completed by end of the year

By Shalini Ravindran

PROJEK Lintasan Kota Holdings (Prolintas) has announced that the construction of the Sungai Besi-Ulu Kelang Expressway (SUKE) and Damansara-Shah Alam Highway (DASH) will be completed by the end of this year.

Prolintas group chief executive officer Datuk Mohammad Azlan Abdullah said they hoped to open both the highways to the public by mid-2020, adding that the highways were currently 52% completed.

SUKE is a 24.4km, three-lane highway that starts in Sri Petaling and passes through Sungai Besi, Alam Damai, Cheras, Kajang and several residential areas before ending in Ulu Kelang.

DASH will be the main connector between the Guthrie Corridor Expressway (GCE), the New Klang Valley Expressway (NKVE), the Damansara Puchong Highway (LDP) and the Penchala Link.


Source: https://www.thestar.com.my/metro/metro- ... lsHXHhA.99
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Re: Malaysia - Infrastructure Projects

Postby winston » Tue Apr 09, 2019 9:53 am

Realigning the ECRL

News reports hint that a scaled-down version of the ERCL could receive the green light prior to the 2nd Belt and Road Summit in Beijing in end-Apr.

Finance Minister suggests that construction cost could be slashed by 48% (RM32bn) to RM35bn vs. the original cost of RM67bn for 2 phases (688km).

In our view, the track may be diverted away from the Titiwangsa Range, which will significantly reduce/eliminate tunnelling and land acquisition cost.

Pending an official announcement on the ECRL and new project structure under the EPCC/turnkey model, we maintain our sector Underweight call.

Source: CIMB

https://brokingrfs.cimb.com/pM7EDtEBVSy ... P_AGA2.pdf
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Re: Malaysia - Infrastructure Projects & Building Materials

Postby winston » Thu Apr 11, 2019 10:13 am

Building Materials – Malaysia

Downside Risk From Higher Cost And Lower Demand

Steel and cement prices have moved up due to higher raw materials and fuel prices.

Although the widely-anticipated revival and commencement of mega projects will be a major catalyst, translation into stronger earnings and valuations would take a while. Hence, the sector is more vulnerable to profit-taking.

Maintain UNDERWEIGHT until clear catalysts emerge.

Downgrade Ann Joo and Hume to SELL following share price run-up.

Source: UOBKH

https://research.uobkayhian.com/content ... 80f7e7ecde
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Re: Malaysia - Infrastructure Projects & Building Materials

Postby winston » Mon Apr 15, 2019 10:59 am

Do construction stocks have more legs to run?

by Chester Tay

KUALA LUMPUR: The speculation of a possible revival of the put-on-hold East Coast Rail Link (ECRL) has been driving construction stocks since the beginning of the year. But now that the project has gotten the green light, investors may be tempted to take profit.

On March 11, The Edge Financial Daily outlined the stocks that could be potential beneficiaries in the event of an ECRL revival, namely Gabungan AQRS Bhd, IJM Corp Bhd, Lafarge Malaysia Bhd, Econpile Holdings Bhd, Malaysian Resources Corp Bhd, Advancecon Holdings Bhd, Gadang Holdings Bhd, WCT Holdings Bhd and Fajarbaru Builder Group Bhd.

Since then, the counters had seen price gains of between 4.88% and 28.13% as at last Friday.

Year to date, their share prices have rallied between 36.51% and 61.05%. This is in stark contrast to 2018 when they lost between 37.03% and 70.81% of their value.

Affin Hwang Capital analyst Loong Chee Wei said the share price rally in construction stocks had partly reflected the expectation of an ECRL revival. Hence, he expects some consolidation in the near term.

“Some investors may sell on news, so we expect share prices to consolidate for a while because the actual award of contracts may take some time to negotiate,” he said over the phone.

Nonetheless, Malacca Securities Sdn Bhd analyst Kenneth Leong said there could be more upside potential for these construction counters as the ECRL materialisation could drive sentiment in the infrastructure construction industry.

Therefore, he does not foresee significant profit-taking activities in the near term.

“Because there are other catalysts like the Penang LRT (light rail transit) and Pan Island Link 1, both projects’ combined contract value is about RM18.6 billion. Although they are slated to start in June next year, some of their work packages will be tendered out by year-end,” he said.

In a note to investors dated March 13, RHB Research analyst Tay Yow Ken also said the scale of the ECRL — if it was revived — was also expected to add to positive construction industry sentiments.

“Regardless of individual beneficiaries, a revival of the project would provide a significant lift in sentiment for the sector due to its (ECRL) large scale and trickle-down potential,” he noted.

Meanwhile, another bank-backed research analyst also said the rally would be sustainable as market sentiment had turn less pessimistic about the revival of previously suspended projects such as the Kuala Lumpur-Singapore high-speed rail (HSR) and mass rapid transit Line 3 (MRT3).

“It is likely the [construction stock] rally can be sustained, underpinned by developments pertaining to other suspended projects such as the HSR and MRT3.

The HSR is bound by the bilateral agreement, and MRT3 is needed because it is a circle line, and it eases transit between multiple MRT lines,” he said, declining to be named.

Source: The Edge

https://www.theedgemarkets.com/article/ ... e-legs-run
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Re: Malaysia - Infrastructure Projects & Building Materials

Postby winston » Tue Apr 16, 2019 9:37 am

Maintain MARKET WEIGHT; ECRL key beneficiaries are selected mid caps

Selected small-mid cap construction companies continue to be key beneficiaries of the revival of
infrastructure projects (refer to overleaf RHS table).

Top beneficiaries are GAQRS, MRCB and IJM Corporation.

https://research.uobkayhian.com/content ... 4d13f22540
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