Gamuda and IJM set to gain from East Coast Rail Link project

Moving forward, the group anticipates a good performance this year from ongoing construction projects and steady earnings from the water and expressway concessions division.

PETALING JAYA: Contractors Gamuda Bhd and IJM Corp Bhd are set to be the potential beneficiaries of the largest double tracking rail project the East Coast Rail Link (ECRL), due to their strong rail expertise, according to analysts.

CIMB Research said Gamuda has the advantage in the underground portion of the project while IJM has an edge in the hill-tunnelling scope.

Based on the details of the ECRL, there will be a total of 50km of tunnelling and underground alignment.

The tunnelling works will be carried out along the Gombak-Bentong area where the single-longest twin hill-tunnel spanning 18km will be built.

There will also be several underground lines, including one in the heavily-populated Gombak area near the Kuala Lumpur city centre.

CIMB Research said that some 10% to 30% of the total contract value of RM55bil could be allocated to local contractors, at an estimated range of RM5.5bil to RM16.5bil.

“In an optimistic scenario, the ECRL could roll out RM16.5bil worth of tenders in stages, over 12 months beginning mid-2017.

“If this is the case, rail infrastructure contract awards are bound to pick up pace in the second half of 2017,” said CIMB Research in a recent report.

The Malaysia Rail Link (MRL), a body under the Finance Ministry tasked with implementing the ECRL, is expected to reveal the tender schedule after approval of the final alignment by end-June this year.

Until details and breakdown of the tenders are available, CIMB Research believed that other small to mid-size contractors that have pre-qualified for the light rail transit and mass rapid transit projects should have an equal chance to bid.

Maybank Investment Bank Research highlighted that besides the construction players, other beneficiaries are building material suppliers, IJM’s Kuantan Port, as well as the Malaysia-China Kuantan Industrial Park as there would be a station at the Kuantan Port City. Construction works for phase one of the 600.3km ECRL are due to start in July 2017, beginning with the northern portion in Kelantan.

The ECRL will run through Kelantan, Terengganu, Pahang and Selangor, with 23 stations.

The train will carry both passengers and freight, travelling up to 160km per hour.