KUALA LUMPUR: CIMB Equities Research expects IJM Corp and Muhibbah Engineering to be the likely winners for the remaining seven more major civil works packages for the Light Rail Transit (LRT) 3 to be awarded.
It said on Friday Gamuda remains a contender for the 2km underground package, though it may not be a frontrunner given the potential change in specifications and alignment.
“Maintain Overweight on the sector on the back of stronger LRT newsflow in 2H17,” it said.
On Thursday, Prasarana Malaysia awarded three LRT viaduct and station packages worth a combined RM4bil.
The first award is to Sunway Construction (SunCon), which bagged a RM2.2bil contract for package GS07 and GS08 that involves the construction of guideways, park and ride facilities, and six stations along a 9.2km stretch. The contract value represents the longest and highest-value LRT 3 package.
The second award was given to Gabungan AQRS. The group secured a RM1.2bil LRT 3 GS04 package to build guideways and three stations over a shorter 4.2km stretch of the LRT 3 alignment, though the scope of works is similarly comprehensive to that of SunCon’s.
The third and smaller RM640mil GS02 package (2.9km) was awarded to WCT Holdings. This is the group’s third LRT 3 package secured year-to-date. This, together with the RM840mil GS03 package won in late-August raises its outstanding order book by 33% to RM6bil from RM4.5bil at end-2Q17.
“Overall, all packages carry a 36-month project duration and we understand that construction works will be mobilised immediately,” it said.
CIMB Research said the RM2.2bil LRT 3 job awarded to SunCon brings its total value of jobs secured year-to-date to a whopping RM3.8bil, arguably the highest in terms of total wins among the pure domestic contractors, and far exceeds its RM2bil full-year win target.
This contract bumps up its outstanding order book by 51% from RM4.3bil as at end-2Q17 to RM6.5bil, closing in to the order books of big cap IJM’s RM8.7bil and Gamuda’s RM7.8bil. SunCon’s order book now is predominantly rail (MRT 2 and LRT 3).
For Gabungan AQRS, the award is the group’s first major rail contract. The RM1.2bil new LRT 3 job (GS04) raises the group’s outstanding order book by 86% to RM2.6bil from RM1.4bil as at end-2Q17.
“This represents a healthy 9.5 times order book-revenue cover, based on the group’s annualised 1H17 construction revenue,” it said.
Year-to-date, Prasarana has awarded seven LRT3 packages comprising various scopes that include depots, stations, and light rail vehicles. Companies that have so far secured LRT 3 contracts are: 1) Mudajaya Group; 2) WCT Holdings; 3) CRRC-Tegap Dinamik JV; and 4) TRC Synergy.
Going by the list, SunCon, Gabungan AQRS and WCT are the first three beneficiaries of the above-ground and station packages, and the biggest winners by contract value.
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