Wednesday, July 17

Sunway Construction only keen on ECRL if higher-value jobs offered to local contractors

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Sunway Construction did not appear to be too excited over the RM44 billion ECRL project, of which details on the job scope or work packages available to local contractors are still lacking.

KUCHING: Sunway Construction Group Bhd (Sunway Construction) is only keen on the East Coast Rail Link (ECRL) project if higher-value jobs such as piling, relocation of utilities and elevated structures are offered to the local contractors, analysts gathered from a recent meeting with the group.

According to AmInvestment Bank Bhd (AmInvestment Bank), the key message gathered from Sunway Construction during a recent visit is the company is bracing itself for an extended lull period in the local construction sector.

“It has acted on this belief by intensifying its pursuit of overseas construction jobs,” the research firm said.

“The company spoke of the discrepancy between the news flow on the revival of mega projects in Malaysia and the reality on the ground at present. It said that there is still hardly any sizeable new public infrastructure project up for bidding in the open market currently.

“It did not appear to be too excited over the RM44 billion ECRL project, of which details on the job scope or work packages available to local contractors are still lacking.

“It will only be keen to participate in the project if higher-value jobs such as piling, relocation of utilities and elevated structures are offered to the local contractors.”

That said, AmInvestment Bank highlighted that subject to the final investment decisions by the project owners, locally, Sunway Construction may bid for a high-rise commercial property project by parent Sunway Bhd, a public hospital project (the research firm gathered from sources, in East Malaysia) and a superstructure job within the Kuala Lumpur City Centre enclave.

“We estimate that these jobs could be worth about RM200 million each.”

As for overseas construction jobs, AmInvestment Bank also highlighted that Sunway Construction has stepped up its hunt for jobs outside Malaysia.

The research firm noted that in India, the group has reopened an office staffed with full-time engineers relocated from Malaysia.

“The team is currently working on tenders for three toll-road projects worth about RM1 billion each in India. In Myanmar, Sunway Construction, via a joint venture (JV) with local conglomerate Capital Diamond Star Group, stands a good chance of winning a building job worth RM200 million to RM300 million for the maiden phase of a mixed project in Mandalay jointly developed by the conglomerate and a Singaporean real estate group.

“Meanwhile, Sunway Construction has mobilised three boring rigs to Singapore (we believe they would otherwise be underutilised in Malaysia) to better position itself in the piling sector in the city state.”

Overall, AmInvestment Bank believed Sunway Construction can weather the construction sector downturn better given the group’s proven ability to compete under an open bidding system, coupled with the availability of building jobs from its parent and sister companies under the Sunway group.