RHB Research expects the government to expedite such projects in the coming months.
PETALING JAYA: Construction companies with a track record in flood mitigation works are poised to benefit as the government aims to expedite flood mitigation projects in the coming months, says RHB Research.
The projects are a crucial aspect for the country’s infrastructure and the federal government has allocated RM11.8bil under Budget 2024 for this to be spread across 33 high priority projects.
Malaysia saw 983 flood incidents reported in 2022 versus 1,057 incidents in 2021, the research firm pointed out.
Citing a joint report by the World Bank and Bank Negara, RHB Research said estimates based on historical flood data saw that a hypothetical one-in-20 year flood can cost the country up to 4.1% of its gross domestic product, along with a 2.2 percentage point increase in the country’s unemployment rate.
“With this in mind, we expect the government to expedite such projects in the coming months. This should benefit contractors with a track record in flood mitigation works,” it said in a report yesterday.
The rollout for flood mitigation projects so far has seen Varia Bhd
receiving a subcontract worth RM95mil from Kator Construction in January to undertake the Klang River flood mitigation project in Section 25, Shah Alam.
Separately, TRC Synergy Bhd secured a RM24mil job in December 2023 from the Department of Irrigation and Drainage to design and build a flood mitigation dam in Gombak, Selangor.
Investable ideas in the flood mitigation space include Malaysian Resources Corp Bhd (MRCB), which has been shortlisted for a flood mitigation job in Selangor.
RHB Research said this is not a surprise as MRCB is involved in the RM380mil Muara Sungai Pahang phase three flood mitigation project.
“Aside from this, Kimlun Corp Bhd has expressed its intention to bid for flood mitigation projects, which will most likely be in Johor given the group’s prominence in the state.
“We also do not discount the possibility of Rohas Tecnic Bhd potentially clinching flood mitigation projects.
“This is premised on its involvement in the RM85mil job constructing pumping stations at two existing retention ponds and laying water pipelines to convey the water to the Semenyih water treatment plant intake.”
For Sabah and Sarawak, the research firm said Naim Holdings Bhd would likely be the main beneficiary for flood mitigation jobs in Sarawak as it was involved in phase one of the Kuching flood mitigation project, which was completed in 2010.
It pointed out that phase two of the Kuching flood mitigation project was highlighted as one of the 33 high priority projects under Budget 2024.
Meanwhile, CIMB Securities said several new contracts under phase 1B of the Pan Borneo Sabah highway are also expected to be awarded in the near future.
The 1,236km Pan Borneo Sabah is sub-divided into three main phases. Offering a total of 20 work packages, Phase 1B is collectively worth RM15.7bil or about RM785mil per package.
Prior to this, progress on the first 15 packages under phase 1A were delayed due to pandemic-related disruptions and changes to the project structure, with only four completed packages to show as of Dec 31, 2023, said CIMB.
The change to the conventional method (from the project delivery partner model) limited the financial resources to fund the project. But a lifeline was given under Budget 2024 and since then, four packages have been awarded on March 22, with physical works poised to start in April.
As for the balance 16 packages, CIMB said the tender exercise should be wrapped up by March with physical work to begin by May.
With a limited pool of Sabah-based contractors having the required experience in road construction, the research firm does not discount the prospect of tie-ups with Peninsular Malaysia or Sarawak-based counterparts.
However it said competition may be intense as a total of 300 companies participated in the tender exercise for Phase 1B, which closed about a fortnight ago.
It will take another month or so before shortlisted candidates are brought to the tender board for deliberation.
