Overweight On Construction Sector

DASH and SUKE to get going?

- The Edge Weekly reported over the weekend that plans to push forth the construction of the Damansara-Shah Alam Elevated Expressway (DASH) and Sg.Besi-Ulu Kelang Elevated Expressway (SUKE) appears to be moving again. DASH (21km) is estimated to cost RM4.2bil. It is a three-lane dual carriageway that traverses from Puncak Perdana (near University Teknologi Mara) to Damansara Perdana. On the other hand, the RM5.3bil SUKE stretches from the Shah Alam Expressway at Bukit Jalil to the Middle Ring Road 2 in Ulu Kelang. The former will have 85% of its main alignment elevated, and the latter – 90%.

- Submissions for the pre-qualification exercise closed on 17 September. The documents were issued just after the Selangor government agreed to include DASH’ alignment into the Petaling Jaya City Plan 2 in June following three years of objection by residents living near the proposed expressway. However, it is still unclear if SUKE has been included in the city plan.

- According to The Edge Weekly, project owner Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) will give priority to contractors which have the relevant experience, notably in building elevated highways. Some of the key criteria for the bidders are: (i) Minimum of five years’ experience & establishment; (ii) Possess a valid Grade G7 license specialising in CE01 (road pavement) & CE02 (bridge construction) from the Construction Industry Development Board (CIDB); (iii) Experience in constructing elevated roads & bridges; and (iv) Having a strong financial background.

- Besides, the applicants’ financial capacity would be evaluated based on its net worth, working capital, value of outstanding works for existing contracts and current credit resources.

- According to the weekly paper, IJM Corp, Sunway, MRCB, Mudajaya Group and UEM Group is among five suitors that appear to be in the running. IJM built the Bangsar linkages in KL as well as the Butterworth Outer Ring Road (BORR).

- Mudajaya was the contractor for the Pusa Sessang Coastal Road in Sarawak, the entrance & exit road for the Lebuhraya Utara Selatan to Gombak in Selangor and two four-lane highways in India.

- MRCB built the 8.1km Eastern Dispersal Link in Johor and the 18km Duta-Ulu Kelang (DUKE) Expressway. Rounding it up, Sunway had a hand in the RM1bil Kajang Traffic Dispersal Ring Road, the Kajang-SILK Highway and Malaysia’s first elevated Bus Rapid Transit (BRT) line.

- Along with the MRT Line 2 and LRT Line 3, we expect more news flow on these two new highways to surface over the next three to six months post the pre-qualification period. More importantly, it adds traction to job flow prospects for Malaysian contractors after a lull in recent months. Maintain OVERWEIGHT.

Source: AmeSecurities Research – 28/09/15