MRT 3 PROJECT ON RIGHT TRACK
Affin Hwang expects financing plan approval early next year, tender in April
GOVERNMENT approval of the financing plan for the Klang Valley Mass Rapid Transit Line 3 (MRT3) project is expected early next year, with the tender coming out in April.
Affin Hwang Capital, which hosted Mass Rapid Transit Corporation Sdn Bd (MRT Corp) in a virtual meeting with institutional investors and listed companies’ management recently, said the MRT3 construction cost could be similar to that of MRT2 as the underground portion was similar in length.
The revised cost of the MRT2 project was RM30.5 billion.
Affin Hwang also said IJM Corp Bhd, Sunway Construction Group Bhd (SunCon) and Gamuda Bhd would have competitive advantages in bidding for the MRT3 project.
This is due to their proposed private funding initiative (PFI) to partially finance the project.
Affin Hwang said MRT Corp had proposed a hybrid financing plan for the MRT3 project.
DanaInfra Nasional Bhd is expected to finance 70 to 90 per cent of the total construction cost via the issuance of governmentlinked bonds, with the balance to be funded on a PFI basis.
“Details of the PFI portion were
not disclosed as the proposal is still subject to government approval. The private funding could involve an SPV for equity investment
in the MRT3 project, contractor financing for the first few years of construction up to 2023 for the MRT3, and transport-oriented developments along the entire MRT networks.
“If MRT Corp’s financing plan is approved by year end or early next year, the tender may be called in April.”
Affin Hwang said the opening of the MRT2 Phase 1 (Kwasa Damansara-Kampung Batu stretch), originally scheduled for last month, had been delayed to at least the second quarter of next year.
It said the revised timeline was due to on-system modules requiring further refinement.
The MRT2 Phase 2 (Kampung Batu-Putrajaya Sentral stretch) opening is on track to open in January 2023.
Affin Hwang has reiterated its “overweight” call on the construction sector.
Its top “buy” picks are Gamuda, HSS Engineers Bhd, SunCon, Gabungan AQRS Bhd and IJM.