Gamuda and MRCB will each have a 50% stake in the entity bidding for the PDP project.
KUALA LUMPUR: Affin Hwang Capital Research estimates the infrastructure works for the Malaysian portion of the KL-Singapore High Speed Rail (HSR) could be worth RM35bil to RM40bil.
It said on Monday the project delivery partner (PDP) fee for the MRT1, MRT2 and LRT3 is based on 6% of the project cost.
“Based on the same fee structure, the Malaysian PDP for the HSR project will potentially earn net profit of RM1.60bil to RM1.82bil (applying a corporate tax rate of 24%) over the 2019-26 construction period or RM200mil to RM228m per annum (based on straight-line recognition basis),” it said.
Affin Hwang Research said based on 50:50 JV shares for Gamuda and MRCB, it estimate the potential earnings lift if the JV secures the project is 21%-24% and 63%-72% respectively in FY19E.
Assuming IJM Corp and Sunway Construction’s (Suncon) share of the PDP fee is 33% each, the potential earnings lift if the IJM Corp-Sunway Construction-Jalinan Rejang-Maltimur Resources JV wins the PDP contract is 25%-29% in FY20E for IJM Corp and 100%-114% in FY19E for Suncon.
The research house said twp major packages for the HSR project are expected to be awarded in 2018.
To recap, the PDP for the Malaysian portion of the HSR is expected to be appointed by end-1Q18 while the AssetsCo contract award is expected by end-2018.
“We believe the Gamuda-MRCB joint venture (JV) has a good chance of winning the bid for the PDP role. HSS Eng could win detailed design contracts for the HSR project.
“We remain Overweight the construction sector. Gamuda and HSS are among our top sector BUYs as potential winners for the HSR project,” it said.
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