Infra works for M’sian part of HSR job could be RM40bil

PETALING JAYA: The infrastructure works for the Malaysian portion of the KL-Singapore High Speed Rail (HSR) could be worth RM35bil to RM40bil, estimates Affin Hwang Capital Research.

In a report, the research firm said the Malaysian project delivery partner (PDP) for the HSR project would potentially earn a net profit of RM1.6bil to RM1.82bil (applying a corporate tax rate of 24%) over the 2019-26 construction period. This is RM200mil to RM228mil per year based on straight-line recognition basis,” it said.

This figure is based on the same fee structure of the PDP fee for the MRT1, MRT2 and LRT3, which is 6% of the project cost.

Affin Hwang Research said based on 50:50 joint venture shares for Gamuda Bhd and Malaysian Resources Corp Bhd (MRCB), it estimates the potential earnings lift if the JV secures the project is 21%-24% and 63%-72% respectively in FY19.

Assuming IJM Corp Bhd and Sunway Construction Group Bhd’s (Suncon) share of the PDP fee is 33% each, the potential earnings lift if the IJM Corp-Sunway ConstructionJalinan Rejang-Maltimur Resources JV wins the PDP contract is 25%-29% in FY20 for IJM Corp and 100%-114% in FY19 for Suncon.

The research house said two major packag- es for the HSR project awarded in 2018.

The PDP for the Malaysian portion of the HSR is expected to be appointed by end-Q1’18 while the AssetsCo contract award is expected by end-2018.

“We believe the Gamuda-MRCB joint venture (JV) has a good chance of winning the bid for the PDP role. HSS Engineers Bhd could win detailed design contracts for the HSR project.

“We remain ‘overweight’ on the construction sector. Gamuda and HSS are among our top sector buys as potential winners for the HSR project,” it said. are expected to be