Project tie-up with Gamuda seen as boost to MMC

  • Business
  • Thursday, 07 Aug 2003

Malaysia Mining Corporation Bhd’s partnership with engineering and construction group Gamuda Bhd is reminiscent of the kind of strategic alliances that MMC’s main shareholder, Tan Sri Syed Mokthar Al Bukhary, struck to win major deals in the past. 

Armed with strong income stream from its investments in gas and power generation, MMC is known to be a shrewd player in the upcoming infrastructure and construction sector. 

“Syed Mokhtar will not go on his own,” said an analyst with a large brokerage. “He will bring in the best in each field and create a win-win situation.” 

Previously, Mokthar, who is believed to be connected to Impian Teladan Sdn Bhd – which owns a 14.5% stake in MMC – had worked with the A.P Moeller group, which had brought the world’s largest container shipping line Maersk Sealand to Port of Tanjong Pelepas from Singapore. 

In its recent ventures with Gamuda, the MMC group has managed to bag at least two high-profile privatisation projects despite strong competition from established rivals. 

The first was the RM2.5bil Stormwater Management and Road Tunnel Project (SMART) in Kuala Lumpur. The latest is reported to be the southern portion of the north-south railway double-tracking project won by a consortium of which MMC is believed to be a member. 

MMC chief executive officer Datuk Ismail Shahudin has indicated that the company could build the southern portion of the rail project at a much lower cost than the original estimate of RM6bil. 

“With its respective partnerships, MMC appears to have become a formidable player in some areas where it does not have expertise,” said the analyst. 

In the SMART project, MMC's partnership with Gamuda has resulted in competitive pricing and a shorter delivery time – an important factor in view of the need to resolve the problem of flash floods in Kuala Lumpur. 

Gamuda itself has won a tunnelling project in Taiwan, which reflects its ability to export its services and yet remain competitive overseas. 

Some analysts believe the strong partnerships that MMC has formed with others and their success in winning competitive bids for projects would mark the beginning of MMC's evolution into a conglomerate with interests in infrastructure, construction and engineering and utilities. 

And this is seen likely to change the fortunes of the MMC group, whose current earnings are driven mainly by its power generation activities and gas operations – estimated to have contributed between RM75mil and RM90mil to its pre-tax profit of RM110mil for the financial year ended Jan 31, 2003. 

Analysts said investors were positive on MMC, judging by the steady rise in its share price over the last few months. And they are beginning to take a closer look at its prospects. 

Some have pointed to the acquisition by its 52.3% -owned unit Tronoh Mines Malaysia Bhd of Zelan Holding Sdn Bhd, into which Tanjung Bin, a 2,100MW power plant project, would be injected. 

When this happens, Tronoh, which was once a mining company, would be transformed into a strong construction and engineering concern. 

“This sort of thing has driven foreign interest in the stock lately,” a dealer with a local brokerage said. 

Stock watch on MMC 

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