Rail is a big theme in 2017

PETALING JAYA: Rail is envisaged to shape up to be a big theme in 2017 within the construction sector, as large-scale projects such as the MRT 2, Gemas-JB double tracking and the East Coast Rail Link (ECRL) are developed, according to CIMB Research.

The research house said on Wednesday that although there is yet any announcement on potential partnerships with, or the participation of local contractors for ECRL, it believes that rail contractors like Gamuda, IJM Corp and WCT are among potential larger cap beneficiaries, if ECRL’s alignment includes viaduct portions, similar to the MRT project.

“We expect tender details in the first half of financial year 2017 (1HFY17) as the ECRL is targeted to commence in selected phases next year,” said CIMB Research.

The research house has highlighted that the Transport Minister Datuk Seri Liow Tiong Lai has cited a change in alignment, a longer tunnel link and the weak ringgit as the reasons for the cost of the ECRL project jumping to RM55bil from only RM29bil, hitherto.

Liow has also said that although an earlier feasibility study conducted by the consulting firm HSS Engineers showed that the ECRL’s cost should not be more than RM30bil, he added that the project will now feature a 50km tunnel link, compared with 30km previously, and there will be more viaducts as well.

CIMB Research has maintained its “overweight” recommendation on the construction sector, with Gamuda remaining as its big cap top pick due to its biggest exposure to MRT 1, 2, potentially MRT 3 and the Gemas-JB double tracking.