On the potential key beneficiaries, CGS-CIMB Research said YTL could be a front-runner given that the group was the original HSR promoter in 2008-2009.
PETALING JAYA: YTL Corp Bhd
, Malayan Cement Bhd (MCement) and HSS Engineers Bhd will likely remain as potential key beneficiaries to the revived Kuala Lumpur (KL)-Singapore high-speed rail (HSR) project, says CGS-CIMB Research.
On Tuesday, the research house hosted a luncheon for clients with key management of MyHSR Corp Sdn Bhd, the entity responsible for the development and implementation of the potential HSR project.
According to CGS-CIMB Research, the HSR’s Request for Information (RFI) stage opened on July 28, 2023 and interested parties have until Nov 15, 2023 to submit their concept proposals covering the technicalities, project costs, commercial model and consortium structure.
“The key takeaways from MyHSR include close to 30 firms that have submitted a request to purchase the RFI documents and the project will be via a design-finance-build-operate transfer model, with the asset to be handed over after the concession period,” the research housue said in a report yesterday.
In addition, five companies namely YTL, MMC Corp Bhd, Malaysian Resources Corp Bhd (MRCB), WCT Holdings Bhd and Berjaya Corp Bhd, shortlisted prior to the RFI was just market sensing and all parties now start on a clean slate.
Other key takeaways include the government may provide funding for land acquisition and HSR trains, which has to reach 350km per hour, added the research house.
Meanwhile, CGS-CIMB Research said: “As the project is still in the RFI stage and not moved to a Request for Proposal stage, many key questions remain unanswered, such as structure of the HSR, potential cost, land acquisition, transit-oriented development at its stations and timeline.
“In our view, the key is obtaining the buy-in from Singapore and resolving issues in the past such as the AssetCo structure and linking the terminus of the HSR in KL to the Express Rail Link (ERL).”
Other pertinent issues that MyHSR also touched on is the potential overlap of the HSR alignment with the Gemas-Johor Baru (JB) double-tracking rail and that the HSR will serve different corridors and targets different customers.
“The HSR will be more for business travellers who value time while the medium-speed double-tracking line caters to the more price-conscious.
“At a later stage (Phase 2), the HSR may also extend to Bangkok,” the research house added.
In terms of land acquisition, CGS-CIMB Research said Sections 4 and 8 of the Land Acquisition Act 1960 (Act 486) provides that the state may acquire land, which is deemed beneficial to the economic development of Malaysia.
On the potential key beneficiaries, the research house said YTL could be a front-runner given that the group was the original HSR promoter in 2008-2009 and in 2018, it was appointed project delivery partner for HSR’s southern section.
Furthermore, YTL has the experience in running the ERL and in the construction of the Gemas-JB double tracking while its cement arm, MCement provides synergistic benefits.
CGS-CIMB Research also highlighted that key sector downside risks include political instability and rising raw material costs and labour.
The research house, which has an “overweight” call on the construction and materials sector, has pegged a higher target price (TP) for YTL at RM1.91, MCement (TP: RM5.55) and HSS Engineers (TP: 80.8 sen), respectively.
To recap, one of the key consideration in the previous HSR structure was the AssetCo, which emerged as a point of contention between Malaysia and Singapore prior to the cancellation of the project.
The AssetCo would have been responsible for building, financing and maintaining all rolling stock, as well as designing, building, financing, operating and maintaining all rail assets (for example, track work, power, signalling and telecommunications).
A Chinese consortium consisting of eight companies, including China Railway Construction Corp, China Railway Construction Corp, China Railway Signal and Communication and Export-Import Bank of China, was reported by local media as interested in bidding for the project, CGS-CIMB Research noted.
The previous alignment was to include seven stations in Malaysia, namely Bandar Malaysia, Sepang-Putrajaya, Seremban, Melaka, Muar, Batu Pahat and Iskandar Puteri, before the track from KL reaches its final destination in Jurong East, Singapore.
The total length of the rail line would have been 350km (335km in Malaysia and 15km in Singapore).
