New MRT3 details could offer more upside


Chief Executive Officer Mass Rapid Transit Corp Sdn Bhd (MRT Corp) Datuk Mohd Zarif Hashim while presenting Insights: MRT 3 Circle Line at Menara Ken TTDI on April 13.

KUALA LUMPUR: MRT Corp Bhd’s new details regarding the mass rapid transit 3 (MRT3) project could offer some upside surprises to the construction sector.

According to Kenanga Research, 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 RM32.9bil be proven accurate – it would be an upside surprise.

“We reiterate an overweight on the sector, ” Kenanga Research said in its construction sector update.

Apart from Gamuda Bhd being the obvious beneficiary, there will also be lesser beneficiaries such as Kimlun Corp Bhd, IJM Corp Bhd and Malaysian Resources Corp Bhd (MRCB).

Apart from Gamuda Bhd being the obvious beneficiary, there will also be lesser beneficiaries such as Kimlun Corp Bhd, IJM Corp Bhd and Malaysian Resources Corp Bhd (MRCB).Apart from Gamuda Bhd being the obvious beneficiary, there will also be lesser beneficiaries such as Kimlun Corp Bhd, IJM Corp Bhd and Malaysian Resources Corp Bhd (MRCB).

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

“Also, due to the longer-than-expected underground portion, more tunnel lining segment (TLS) components are required – which commands better margins than SBGs, ” it added.

With the introduction of private funding, Kenanga Research expects IJM and MRCB to stand a good chance of undertaking a bigger role in the MRT3.

This is given their relatively bigger and stronger balance sheet, which enabled the two companies to gear up to provide funding needs.

MRT Corp on Monday revealed that tenders for the MRT3 will be out as early as August 2021, with Kenanga anticipating the awards to be out in the first half of 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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Kumlun , MRCB , Gamuda , MRT3 , Kenanga Research ,

   

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