Suria Capital's SCHB Engineering oversees the Group's property development ventures which include the iconic 'Jesselton Quay' and 'One Jesselton Waterfront' projects.
KUALA LUMPUR: Suria Capital and Gabungan AQRS could emerge among the potential beneficiaries of the RM12bil Pan Borneo Highway (Sabah), as the companies will jointly bid for the project, says CIMB Equities Research.
The research house pointed out on Wednesday that another positive for Gabungan AQRS is its 49%-owned SEDCO Precast’s leading position in the Sabah precast concrete market. This may enable it to secure a lion’s share of the estimated RM2bil precast orders from the highway project.
Currently, SEDCO Precast operates at an annual capacity of 36,000 tonnes. It is in the midst of expanding its operations to produce 150,000 tonnes per annum.
“According to Gabungan AQRS, it estimated that there is at least RM2bil worth of precast materials required for the RM12bil Pan Borneo Highway (Sabah) project, which will be procured in stages.
“Given the lack of high-quality precast material suppliers in Sabah, SEDCO Precast has proposed to the Sabah state government for it to become the nominated preferred supplier for the Sabah portion of the Pan Borneo Highway.
“It is already working with Pan Borneo Highway’s consultants to ensure that SEDCO Precast’s products fit the highway’s design,” said the research house.
CIMB Research said the progress of the RM12bil Pan Borneo Highway (Sabah) could accelerate from 2018 considering that five advanced work scopes of the total 35 packages for phase 1 have been awarded so far.
Phase 1 covers the alignment from Sindumin to Tawau. The remaining 30 packages should be awarded once the value assessment and engineering process are finalised.
The research house issued the report after it hosted 10 buy-side analysts and fund managers to visit Sabah from Sept 25 to 26.
It said this was its first trip to Sabah, with the sole purpose of getting a better understanding of 1) the major sector drivers under the Sabah Development Corridor (SDC) masterplan, 2) Sabah’s tourism potential that is driving the commercial developments at One Jesselton Waterfront, 3) spillover effect of the construction of the Pan-Borneo Highway and 4) Suria Capital’s port capacity expansion plans.
“Our ground checks during the visit also indicated that the proposal to construct a Bus Rapid Transit (BRT) system in Kota Kinabalu (which would mainly connect Jesselton Waterfront City and the Kota Kinabalu International Airport) is ongoing.
“A positive surprise was that there is also an alternative proposal to build an LRT system instead, due to its efficiency, speed and higher passenger capacity. This would be positive as it would open the tender scope to reputable rail contractors in the Klang Valley and existing contractors in Sabah,” it said.
“Overall, from our visit, we believe that Sabah’s combined key attraction as a tourism destination, the development of new commecial areas/CBD, expansion potential of its ports, and the rollout of new transport and road projects should rejuvenate many opportunities for investments in infrastructure and commercial projects,” said the research house.
CIMB Research said in its view, this should not be overlooked considering the success and progress of the other four regional growth corridors in East Malaysia and Peninsula Malaysia, i.e. Iskandar (Johor), ECER (East coast states in Peninsula), NCER (Northern states in Peninsula) and SCORE (Sarawak).
It also said in terms of outlook, construction activities for existing jobs in Greater Kota Kinabalu and its surrounding areas are likely to pick up pace over the next two to five years, catalysed by the progress of the new Jesselton Waterfront City (JWC) and port expansion plans by Suria Capital.
“Based on the construction job statistics data provided by the Construction Industry Development Board (CIDB), over the last five years, Sabah’s share of the awarded construction jobs’ aggregate value in Malaysia were only in the single digits,” it said.
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