KUCHING: Analysts believe infrastructure awards will dominate in the 2H driven by packages for KVMRT2, LRT3, Pan Borneo Highway, SUKE and DASH.
To date, the research arm of AmInvestment Bank Bhd (AmInvestment Bank) estimated MRT Corp to have been awarded circa RM22 billion worth of major KVMRT2 packages out of the total RM32 billion value.
Major packages awarded include the underground works, four viaduct packages, and three system packages. Four main packages for Pan Borneo were also awarded. Awards for the RM9 billion LRT3 project will begin in 2H.
Construction awards in 1Q16 fell 66 per cent on year to RM11.9 billion especially in March which recorded the lowest in terms of number of projects and value.
“Nevertheless, we foresee a strong rebound as major awards were dished out in the later part of 1H. 2H will be stronger on imminent rollout of major awards,” it opined.
“We believe awards for the RM9 billion LRT3 will come in earnest in 2H following the completion of the pre-qualification stage with 96 out of 124 applicants making the cut. A total of 24 companies/consortia have been pre-qualified for three system works packages, 22 companies for large infrastructure jobs, 22 bumi companies for restricted tenders, and eight companies for the tunnelling portion.”
Companies qualified for the open category of the LRT infrastructure jobs include Gamuda, WCT, IJM, Ikhmas Jaya, Kimlun, Sunway Construction, Bina Puri, and Mudajaya.
Notable companies in the bumi category include Naim, Zecon, MTD Group and TSR Capital.
According to local media reports, there are reportedly only three infrastructure packages up for grabs in the open category and six in the bumi category. Meanwhile, familiar names eyeing tunnelling works include Gamuda, IJM, Sunway Construction, WCT and Muhibbah Engineering.
Last week, Prasarana handed the qualification letter to 24 companies/consortia for three system packages. Foreign firms make up most of the list, with companies such as Mitsubishi-Sumitomo consortium, Alstom, Posco and Beijing Sheenline.
Particularly, the first consortium has prequalified for all three system packages.
Local companies involved in the bid include Ikhmas Jaya, Pestech, Ekovest and Apex Communications. The remaining system package is for the supply of rolling stocks.
According to Prasarana, the first set of awards will come within two to three months. The entire tender process will end with the final award of the last scheduled tender by year-end. Prasarana has confirmed the alignment and location of all 26 stations, and begun land acquisitions.
Recall that MRCB and George Kent were appointed the project delivery partner for LRT3, which will earn a management fee of 6 per cent of the total project cost.
The line will span 37km from Bandar Utama to Johan Setia, Klang with 2km of the alignment underground.
The line is slated for completion in 2020.
Besides that, the research house also expects more KVMRT2 tenders and awards in the 2H.
Based on the tender schedule, four system work packages are currently under evaluation while the tender for viaduct package V204 is expected to close in August. Upcoming tenders include the remaining six viaduct packages and four elevated station packages.
“Based on an average price of RM320 million per km, the viaduct packages could be worth RM1.2 billion-RM1.4 billion,” said AmInvestment Bank.
“Apart from the familiar big boys, companies we like as beneficiaries of KVMRT2 jobs include Kimlun, Econpile and Ikhmas Jaya for piling works.”
Awards for the remaining eight main Pan Borneo packages may be announced as soon as mid-July, according to project delivery partner (PDP) Lebuhraya Borneo Utara Sdn Bhd (LBU).
Tenders were closed on May 30 and a total of 13 pre-qualified companies/consortia are bidding for the remaining eight packages worth an average of RM1.5 billion each.
Recall that four packages for Pan Borneo have been awarded since April last year with works for these packages have reached the five per cent mark.
“For the main work packages, we like the chances of KKB-WCT, CMS-Bina Puri, Naim-Gamuda, and Ikhmas-Titanium JVs. The local Sarawakian parties have a 70 per cent stake in the JVs.
“Other Peninsular-based companies in the running include Sunway Construction, IJM Corp and MRCB. We also like KKB and Sarawak Cable as beneficiaries of the utilities packages with CMS as a main supplier of raw materials,” enthused the research house.
“We continue to like specialist contractors such as Kimlun, Econpile and Ikhmas Jaya to secure specialised contracts in the 2H. Kimlun had clinched the SBG supply for KVMRT2 worth RM200 million in March; it is a favourite to secure the TLS contract potentially worth circa RM50 million.”
As a leading piling specialist, Econpile may secure piling works for KVMRT2 in addition to those for property-related contracts. As a more diversified contractor with specialty in piling and bridge construction, Ikhmas is currently bidding for jobs for Pan Borneo, SUKE, DASH, and LRT3.
Particularly, AmInvestment Bank believe Ikhmas stands a good chance to secure Pan Borneo packages with high bridge content. Sarawak Cable is also a niche player that will benefit from power transmission line projects in Sarawak and Peninsular Malaysia.
“All in, we believe new awards and tenders will continue to drive the construction sector in the 2H.”