Analysts: Construction job flows to pick up again in 2H17
KUCHING: The momentum on contract awards and job flows in the construction sector is expected by analysts to pick up again in the second half of 2017 (2H17), continuing into 2018.
According to the research arm of Maybank Investment Bank Bhd (Maybank IB Research) in a sector update, major rail projects will continue to be a key feature with the KVLRT 3 expected to kick-off the 2H17 contract awards as the first main work packages are likely to be announced in July or August.
“Other mega rail projects which could award packages in 2H17 would include the Gemas-Johor Baharu double track rail and maiden packages from the 600 kilometre (km) East Coast Rail Link (ECRL),” Maybank IB Research said.
“Remaining packages from KVMRT 2, Pan Borneo Sarawak Highway and West Coast Expressway could be awarded as well.”
Maybank IB Research noted that building construction jobs coming from transit oriented developments (TOD), Petroliam Nasional Bhd’s ( Petronas) refinery and petrochemical integrated development (RAPID), private property developments and government housing schemes would also continue to contribute construction works.
It further noted that all these would replenish construction companies’ orderbooks progressively.
Maybank IB Research highlighted that Malaysia Rail Link (MRL) launched a three-month public display of the ECRL alignment Phase 1 which ended in May 2017.
“The display confirmed the 600km length with 23 stations that will stretch from the Integrated Transport Terminal (ITT) Gombak to Wakaf Bahru in Kelantan,” the research arm said. The research arm pointed out that in May 2017, a supplementary agreement was signed to facilitate the construction of the second phase of the ECRL which will cover the part from the Integrated Transport Terminal (ITT) Gombak to Port Klang with an estimated length of 88km.
It said that the estimated cost for this section is RM9 billion.
Maybank IB Research gathered that feasibility studies for Phase 2 are currently on-going and a public display will be conducted after the completion of the studies.
“We could see the first contract awards from ECRL in 2H17,” it projected.
Maybank IB Research’s checks suggested that 30 per cent of the estimated contract value could be allocated to local contractors.
“There is light (at the end of the tunnel). The last time I thought the tunnel was closed… now I see some light,” he added.
Asked when the One AirAsia could be realised, Fernandes said: “My target would be two years. But hey, AirAsia is going places no one has ever gone before.”
To pave the way for the setting up of the holding company, AirAsia needs to list the Philippine and Indonesian units. Currently, only the Malaysian and Thai units are listed.
On the latest update of the AirAsia’s plan to list its Philippine unit, he said: “Plans are going as planned. Our Group deputy chief executive officer Rozman is handling both the Indonesian and Philippine (units). We are very optimistic on both… business in Indonesia and the Philippines have been very strong for us. It is the right time.”
Fernandes said he targeted the Philippine unit to conduct an initial public offering by this year or the first quarter of next year, adding that it was a good time for AirAsia to get listed and expand amid the Philippine government’s policies, as well as the opening up of the aviation market.
He said the launch of direct flights from Kuala Lumpur to Davao reflected AirAsia’s commitment in expanding the Philippine market.
“Today is a great day because I love starting routes that no one else does. I love connecting people that don’t have connections. You will see how appreciative they ( passengers) are of AirAsia opening to Kuala Lumpur. That’s a great thing. That is what we want to continue doing, bringing people closer together and making Asean a real market.
“AirAsia has been recognised as an Asean brand. It’s great for a Malaysian company to be doing that. We will continue that journey. Where it takes us, I don’t know. But I can see that people around Asean really like AirAsia. Today was very nice how they really appreciate what we were doing… So, it is a good start,” he said.
On AirAsia’s plan to add more planes to its fleet to cater to the airline’s expansion plan and growing demand for affordable air travel, Fernandes said: “We talk to Airbus everyday about buying more planes. We probably don’t have enough planes and we began to lease more. But this is the best period I have ever seen in AirAsia. We would definitely be revising the number.”
On new plane delivery, he said AirAsia bought another 14 planes and would take delivery of 29 planes this year.
On the long-haul expansion plan, he said AirAsia X Bhd has to get some more planes and would announce some destinations once it is finalised, adding that London is not on the plan at the moment.
However, Fernandes hopes the Los Angeles route could commence next year as it is a potential route after Hawaii.
“We are really short of planes at the moment. So, we have to wait and see when we can get those planes,” he added.
Asked whether AirAsia plans to penetrate the Central Asian market, Fernandes said: “AirAsia is all about going everywhere. The Central Asian region has beautiful countries with amazing histories. For sure, we will be there one day.” — Bernama