New MRT3 details could offer more upsides

KUALA LUMPUR: MRT Corp's new details regarding the Mass Rapid Transit 3 (MRT3) project could offer some upside surprises to the construction sector, said Kenanga Research.

The research house said it is net positive over the new details as "behind-the-scenes progress" is picking up fast.

"Despite the stretched out construction period of 10 years; should our guesstimate contract quantum of RM32.9b be proven accurate – it would be an upside surprise.

"Reiterate Overweight on the sector," it said in its construction sector update.

It noted that apart from Gamuda being the obvious beneficiary there will be lesser beneficiaries, such as Kimlun, IJM and MRCB.

Kenanga said Kimlun being an IBS precast expert would benefit from the supply of segmental box girders used above ground and tunnel lining segment used underground for the MRT3 project.

"Also, due to the longer-than-expected underground portion, more TLS components are required – which commands better margins than SBGs," it added.

With the introduction of private funding, Kenanga expects IJM and MRCB to stand a good chance of undertaking a bigger role in the MRT3 given their relatively bigger and stronger balance sheet, which enables them to gear up to provide funding needs.

MRT Corp yesterday revealed that tenders for the MRT3 will be out as early as August 2021, with Kenanga anticipating the awards to be out in 1H 2022 at the soonest.

MRT Corp is also exploring 10-30% private funding arrangements to alleviate the country's fiscal burden.

The developer announced that MRT3 will have over 30 stations and 10 interchanges spanning 50km, which is longer than the 40km initially expected.

Of the 50km, 20km will be underground, which is more than the previous expectation of 25-30%.

The MRT3 will be rolled out in five phases over 10 years with the construction period now longer than the previous seven-year expectation.

The first phase will be rolled out within five to seven years from the start of construction.
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Kenanga Research , MRT Corp , MRT3 , Gamuda , IJM , Kimlun , MRCB


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