Bridge project sparks interest in UEM Builders


  • Business
  • Wednesday, 15 Sep 2004

BY IZWAN IDRIS

NEWS that the multi-billion ringgit Penang Second Link bridge project would be included under the 9th Malaysia Plan helped boost trading interest in UEM Builders Bhd yesterday, dealers said. 

At the close, the stock was up three sen at RM1.24, but off the day's high of RM1.25. Volume surged to a seven-month high of 9.1 million shares. 

“Investors seemed to link the second bridge project to UEM Builders,’’ a dealer said. 

Deputy Works Minister Datuk Mohd Zin Mohamed said on Monday that the Penang Second Link was one of the projects identified under the country's five-year plan from 2006 onwards. 

UEM Builders (formerly known as Intria Bhd) holds the concession rights to the Penang Bridge till 2018 which, according to punters, makes it one of the frontrunners for the Second Link project. 

However, analysts believe the long-delayed project could be opened for new tender. 

They said it was no secret that quite a number of local construction players were keen on the project. 

“Ultimately, we think the bigger boys will benefit from the larger turnkey works and project management aspect, and the actual physical works will likely flow down to the smaller players,’’ an analyst at a local stockbroking house said. 

He said companies linked to the project included those with strong in-house engineering capabilities, like Ranhill Bhd and UEM Builders. The latter is riding on the global experience of its 34.6% associate, Constain Group. 

MTD Capital Bhd is also believed to have teamed up with 29% associate, ACP Industries Bhd, to bid for the potentially lucrative project. 

Analysts said that unlike toll concessions elsewhere, traffic volume on the Penang Bridge and actual income, had surpassed forecasts in past years. 

According to UEM Builders data, island-bound traffic last reached 19.82 million vehicles, or an average 54,300 vehicles a day, which was near the bridge's maximum capacity. 

Analysts said that while UEM Builders was reportedly in negotiation to expand the bridge – costing around RM400mil – the long-term solution seemed to be a new bridge. 

“One of the major issues that has been holding back the second link bridge project was funding, but it (the bridge) is necessary to cope with rising traffic,'' an analyst said. 

According to estimates made in 1997, the Second Link bridge project would cost RM2bil to RM2.6bil. Analysts believe the project value could easily reach RM3bil by early 2006, taking into account material costs which are higher now. 

“We would expect tendering to start soon, to be followed by the long process of vetting,'' the analyst said. 

The idea for the second link to Penang island was mooted several years ago. 

In 2001, the Works Minister had said a second bridge linking Penang island to the peninsula would be built to ease congestion on the existing bridge. 

The proposed 23.6km bridge would connect Batu Maung in the southern tip of Penang island and Batu Kawan in Seberang Prai. 

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