Analysts weigh on local win for MRT3 race
KUCHING: Local consortium MMC Corporation Bhd, Gamuda Bhd and George Kent (Malaysia) Bhd Joint Venture (MMC-GamudaGkent JV), and foreign consortium China Communications Construction Company Ltd and China Communications Construction Co (M) Sdn Bhd JV (CCCC JV) have been viewed as likely candidates that could win the MRT Line 3 (MRT3) project.
To recap, four parties had originally submitted turnkey bids for the RM 40 billion MRT3 project and of those four, the MMCGamuda-Gkent JV and the CCCC JV were widely purported to be the top contenders for the award.
In a construction research report, the research arm of HongLeong Investment Bank Bhd ( HLIB Research) believed that the two local consortiums were top contenders for the MRT3 race as they both possess the necessary skills sets required by the major and complex infrastructure project.
It noted that the local JV’s advantage would come from its pure local set up while the CCCC JV’s advantage would come from their ability to offer a better financing package.
However, reports from The Edge Weekly has indicated otherwise as it was revealed that the local JV had offered a financing rate of 4.7 per cent per annum (pa) while the CCCC JV had secured a financing rate of five per cent pa with a proposed US dollar denominated debt raised by Chinese banks.
Factoring in the lower financing rate for the local JV, HLIB Research believed that the local JV has the highest participating chance for the award as it is the only contender with a pure local setup – maintaining the need for mega infrastructure projects to be kept amongst Malaysians.
While the Government has guided that it places a higher weighting on
From a technical capability perspective, MMC and Gamuda have experience on PDP and tunnelling for MRT1 and MRT2, the Northern Double Track and the SMART Tunnel. Gkent on the other hand has experience with LRT ext systems, LRT3 PDP and MRT2 track works HLIB Research
technical capability and tunnelling experience rather than financing, HLIB Research pointed out the local JV’s lower financing rate would still be a significant factor as both consortiums have a long and commendable track record of their technical expertise.
“From a technical capability perspective, MMC and Gamuda have experience on PDP and tunnelling for MRT1 and MRT2, the Northern Double Track and the SMART Tunnel. Gkent on the other hand has experience with LRT ext systems, LRT3 PDP and MRT2 track works,” said the research arm. In the event that the entire award is won by the CCCC JV, HLIB Research pointed out that there should still be significant participating opportunity to local contractors such as the MMC Gamuda-GKent JV.
“MR T Corp has mentioned that the MRT3 will continue to enforce the requirement for local participating including Bumiputera, which we understand to be in the tune of 40 to 50 per cent or RM16 to RM20 billion.”
All factors considered, HLIB Research retained an ‘overweight’ call on the local construction sector with both Gamuda and GKent as its top sector picks given their strong associations with the booming mega rail jobs locally.