MMC-Gamuda-George Kent JV top contender for MRT3
Research house says strong competition expected from CCCC
PETALING JAYA: The MMC-Gamuda-George Kent joint venture (JV) is the top contender for the mass rapid transit 3 (MRT3) project, according to Hong Leong Investment Bank (HLIB) Research.
HLIB Research said in its report that the JV would offer a strong confluence of civil expertise (through MMC and Gamuda) and systems experience (via George Kent).
“Track record-wise, MMC and Gamuda (via a JV) have undertaken the project development partner (PDP) role and tunnelling works for MRT1 and MRT2.
“They have also built the Northern Double Track and SMART tunnel.
“As for George Kent, it previously completed the LRT extension system works and is now undertaking track works for MRT2 and the PDP role for LRT3,” HLIB Research said.
However, the research house highlighted that the strong track record from the JV was challenged by strong competition from China state-owned construction giant China Communications Construction Co Ltd (CCCC).
“We feel that competition from CCCC would be further heightened, given the funding requirements in the tender equation.
“To recap, the minimum financing period must be 30 years and the margin of financing must not be less than 90% of project value,” it said.
CCCC entered the race via the CCCC-China Communications Construction Co (M) Sdn Bhd JV.
The other two contenders are the SapuraTIEC Consortium and the Pacific-MudajayaJEC Consortium.
However, CIMB Research highlighted that although the intention of tendering out the project on a turnkey basis was to seek the lowest cost of funding, Mass Rapid Transit Corp Sdn Bhd did not rule out resorting to the Government’s special-purpose vehicle DanaInfra Nasional Bhd, the fundraiser for the first two MRT projects should financing options not be favourable.
“We are surprised that the CCCC JV emerged as the sole foreign consortium, as we expected Japanese contractors to be keen on the design, build and finance role too.
George Kent joins Gamuda and MMC Corp in a purely local consortium but with strong combined domestic rail expertise, in our view,” CIMB Research said.
CIMB Research expected that the next course of action for most rail projects would be the contract awarding stage.
“The MRT3 turnkey contract will be awarded within the first quarter, while the East Coast Rail Link awards could possibly get the ball rolling in the second quarter.
“The Kuala Lumpur-Singapore high-speed rail project delivery partner scope is expected to be announced in mid-2018, while the AssetsCo award could be announced at end2018,”
Gamuda is CIMB Research’s construction sector top pick with its strong tender visibility in all the rail projects.