By Jeeva Arulampalam
Published: 2009/08/26
IJM Corp Bhd (3336), the country's second biggest construction company, expects to maintain an order book of more than RM4 billion as it bids for sizeable government contracts locally and abroad.It aims to bid for infrastructure projects that will be rolled out under government stimulus packages in Asia. Governments around the world are spending more money to pull their economies out of recession."We would replenish the order book so that we maintain about RM4 billion plus at any one time. Since our chewing rate is about RM200 million a month, we have to (replenish) about RM2 billion plus a year," said IJM Corp managing director and chief executive officer Datuk Krishnan Tan Boon Seng.He was speaking to reporters after the group's annual and extraordinary general meetings in Subang Jaya yesterday.
Some projects IJM Corp is eyeing include the new permanent low-cost carrier terminal in Sepang and the light rail transit (LRT) extension works in Kuala Lumpur."We do a broad range of work from civil engineering works to building. You will see us participating where there are sizeable jobs," said Tan, adding that the company was bidding for works here and abroad.Tan said tenders for both the LCCT and LRT projects have yet to be called."For the LCCT, the pre-qualification process has been called and we have also submitted. We will look to bid for the sizeable packages (once the tender is open)," he said. Tan also said that there will be other tenders from the Pahang-Selangor Water Transfer project, including the dams, intakes, ancillary infrastructure and the treatment plant.
On IJM Corp's property division, Tan said there are strong property sales yet to be billed and expects the division to perform decently given the wide range of products - retail, industrial, medium- and high-cost developments - in high density locations.Meanwhile, the group saw its first quarter net profit decline 22.5 per cent to RM70.8 million while revenue slipped 5 per cent to RM1.16 billion.In a Bursa Malaysia announcement, it said the lower earnings for the three-month period to June 30 2009 was due to lower contributions from its plantation division as crude palm oil prices fell.Also, the construction division suffered lower margins from old contracts affected by higher costs in the previous year and higher financing costs incurred in India.The plantation division earnings dipped as the group expedited its fertiliser application and repair cost for infrastructure due to heavy rainfall and floods."We don't think that the first quarter is reflective of the following quarters," said Tan. He added that the current fiscal year ending March 31 2010 would be similar to 2007, where the first quarter was lower but later quarters showed improvements.
Showing posts with label Pahang Water Tansfer. Show all posts
Showing posts with label Pahang Water Tansfer. Show all posts
Wednesday, August 26, 2009
Wednesday, June 10, 2009
Malaysian construction sector makes comeback
KUALA LUMPUR, June 10 — Malaysia’s construction sector is coming back with a vengeance as the government accelerates spending to counter the downturn. According to Jon Oh, an analyst with CLSA here, the sector could have outperformed the broader market index by as much as 30 per cent over the last three months.
There are other reasons for the rekindled interest including the fact that construction firms have returned to the black: infrastructure builder IJM, for example, posted RM290 million in net profit for its 2008 financial year from a loss of RM421 million the year earlier. In addition, falling materials’ prices also imply larger margins.
But the key driver is the accelerated spending which seems to be driven by Prime Minister and Finance Minister Datuk Seri Najib Razak. In late May, for example, the government awarded a RM1.3 billion tunnelling project to a Japanese-Malaysian consortium of companies, including IJM, to kick-start the Pahang-Selangor interstate water transfer project that was first announced five years ago.
The RM5-8 billion project is an ambitious, and environmentally contentious, project to transfer water from a newly created dam in Pahang through a tunnel in the Main Range of mountains and piped from a newly created water treatment plant to end-users in Selangor.
It was deemed necessary in 2004 after studies showed that the demand for water in the Klang Valley, Malaysia’s most industrialised hub, would outstrip supply by 2014.
Malaysia’s poor fiscal situation put the project on ice but the downturn and the ascendancy of Najib, who is from Pahang, seems to have given the project a new urgency.
The new emphasis on accelerated spending is partly driven by the need to prevent a hard economic landing for Malaysia which entered recession in its first quarter.
But it’s also political: the ruling Barisan Nasional is under severe pressure from the opposition and needs to shore up public support by demonstrating a firm hand on the economy ahead of general elections in 2013.
On the water project, the construction industry is interested because only the tunnelling works have been awarded.
The Pahang portion of the contract — the dam, piping and the tunnelling — are likely to be dominated by Japanese contractors as it is being funded by a US$1 billion (RM3.51 billion) loan from the Japan Bank for International Cooperation. Even so, AMMB Banking Group picked Loh and Loh (a Malaysian dams’ specialist) and JAKS Resources (a pipes supplier) as likely beneficiaries for sub-contract work.
There is an estimated RM2.3 billion worth of contracts still to be handed out on the Pahang portion of the works.
Around RM4-5 billion worth of work is up for grabs on the Selangor side, which will have to be awarded soon, so that both sides can meet the 2014 deadline seamlessly. This portion, however, is to be government-funded so all the work will go to local contractors. For this, AMMB picks infrastructure specialist IJM, Gamuda, Loh and Loh and, once again JAKS as the major beneficiaries.
But water isn’t the only thing Malaysian construction firms are eyeing.
Under government plans to improve urban transport, state agency Prasarana has been tasked with spending RM35 billion to improve public transport in the Kuala Lumpur area by extending Light Rail Transit and bus networks.
So far it is still in the design state but Prasarana has announced that it will go to the market to raise an initial RM4 billion to kick things off. Cumulatively, the news-flow has caused a buzz in the industry. — Business Times Singapore
There are other reasons for the rekindled interest including the fact that construction firms have returned to the black: infrastructure builder IJM, for example, posted RM290 million in net profit for its 2008 financial year from a loss of RM421 million the year earlier. In addition, falling materials’ prices also imply larger margins.
But the key driver is the accelerated spending which seems to be driven by Prime Minister and Finance Minister Datuk Seri Najib Razak. In late May, for example, the government awarded a RM1.3 billion tunnelling project to a Japanese-Malaysian consortium of companies, including IJM, to kick-start the Pahang-Selangor interstate water transfer project that was first announced five years ago.
The RM5-8 billion project is an ambitious, and environmentally contentious, project to transfer water from a newly created dam in Pahang through a tunnel in the Main Range of mountains and piped from a newly created water treatment plant to end-users in Selangor.
It was deemed necessary in 2004 after studies showed that the demand for water in the Klang Valley, Malaysia’s most industrialised hub, would outstrip supply by 2014.
Malaysia’s poor fiscal situation put the project on ice but the downturn and the ascendancy of Najib, who is from Pahang, seems to have given the project a new urgency.
The new emphasis on accelerated spending is partly driven by the need to prevent a hard economic landing for Malaysia which entered recession in its first quarter.
But it’s also political: the ruling Barisan Nasional is under severe pressure from the opposition and needs to shore up public support by demonstrating a firm hand on the economy ahead of general elections in 2013.
On the water project, the construction industry is interested because only the tunnelling works have been awarded.
The Pahang portion of the contract — the dam, piping and the tunnelling — are likely to be dominated by Japanese contractors as it is being funded by a US$1 billion (RM3.51 billion) loan from the Japan Bank for International Cooperation. Even so, AMMB Banking Group picked Loh and Loh (a Malaysian dams’ specialist) and JAKS Resources (a pipes supplier) as likely beneficiaries for sub-contract work.
There is an estimated RM2.3 billion worth of contracts still to be handed out on the Pahang portion of the works.
Around RM4-5 billion worth of work is up for grabs on the Selangor side, which will have to be awarded soon, so that both sides can meet the 2014 deadline seamlessly. This portion, however, is to be government-funded so all the work will go to local contractors. For this, AMMB picks infrastructure specialist IJM, Gamuda, Loh and Loh and, once again JAKS as the major beneficiaries.
But water isn’t the only thing Malaysian construction firms are eyeing.
Under government plans to improve urban transport, state agency Prasarana has been tasked with spending RM35 billion to improve public transport in the Kuala Lumpur area by extending Light Rail Transit and bus networks.
So far it is still in the design state but Prasarana has announced that it will go to the market to raise an initial RM4 billion to kick things off. Cumulatively, the news-flow has caused a buzz in the industry. — Business Times Singapore
Tuesday, May 26, 2009
Pahang-Selangor tunnel project sign of improving contract flows
Tuesday May 26, 2009
Analysts: Pahang-Selangor tunnel project sign of improving contract flows
By YVONNE TAN
PETALING JAYA: The construction of the 44.6km tunnel to channel raw water from Pahang to Selangor, which will start on June 1, is a significant signal that contract flows are improving, analysts said. “We think this is a good development and it should trigger the award of contracts for the remaining packages in the entire water transfer project,” AmResearch senior analyst Mak Hoy Ken said. “I think we can all heave a sigh of relief that this part of the project is finally underway. It signals that the current government under the new administration is pro active,” Kenanga head of research Yeonzon Yeow told StarBiz yesterday.
A signing ceremony to formalise the award for the construction of the RM1.3bil tunnel was held yesterday between the parties involved. It was witnessed by Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui.
The main contractor for this project is a consortium in which Japanese contractors Shimizu Corp and Nishimatsu Construction Co Ltd each has an interest of 30% – a majority of 60% – while IJM Corp Bhd and UEM Builders Bhd have 20% each.
It is understood that every party has seconded the relevant staff to a project management team, which will then manage the project collectively.
The tunnel project, which is aimed at meeting the needs of water consumers in Selangor, Kuala Lumpur and Putrajaya until 2025, is estimated to have an overall cost of about RM3.9bil. The RM1.3bil is the first of four phases in the RM3.9bil tunnel project. Besides the tunnel project, there are other works involved in the entire water transfer project, which is estimated to have a cost of about RM8bil. The remaining contracts have not been awarded but it is understood that interested parties have already been pre-qualified for the remaining work packages. When contacted, a UEM Builders Bhd spokesman said the company was “considering” pursuing the other packages in the entire project but did not elaborate.
Kenanga’s Yeow said yesterday’s signing between the parties would serve as a “benchmark” for other key government projects to be sped up. “It bodes well for the economy because then, domestic spending is able to compensate for weaker export sales which is what the Government intended in the first place to counter a major slowdown in economic growth,” he said.
The bulk of the tunnel project cost will be financed through a loan from the Japan International Corp Agency (JICA) while the rest will be funded by a federal government grant.
Once the tunnel is completed, Selangor would have to pay RM80mil a year to the Pahang government for water.
Analysts: Pahang-Selangor tunnel project sign of improving contract flows
By YVONNE TAN
PETALING JAYA: The construction of the 44.6km tunnel to channel raw water from Pahang to Selangor, which will start on June 1, is a significant signal that contract flows are improving, analysts said. “We think this is a good development and it should trigger the award of contracts for the remaining packages in the entire water transfer project,” AmResearch senior analyst Mak Hoy Ken said. “I think we can all heave a sigh of relief that this part of the project is finally underway. It signals that the current government under the new administration is pro active,” Kenanga head of research Yeonzon Yeow told StarBiz yesterday.
A signing ceremony to formalise the award for the construction of the RM1.3bil tunnel was held yesterday between the parties involved. It was witnessed by Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui.
The main contractor for this project is a consortium in which Japanese contractors Shimizu Corp and Nishimatsu Construction Co Ltd each has an interest of 30% – a majority of 60% – while IJM Corp Bhd and UEM Builders Bhd have 20% each.
It is understood that every party has seconded the relevant staff to a project management team, which will then manage the project collectively.
The tunnel project, which is aimed at meeting the needs of water consumers in Selangor, Kuala Lumpur and Putrajaya until 2025, is estimated to have an overall cost of about RM3.9bil. The RM1.3bil is the first of four phases in the RM3.9bil tunnel project. Besides the tunnel project, there are other works involved in the entire water transfer project, which is estimated to have a cost of about RM8bil. The remaining contracts have not been awarded but it is understood that interested parties have already been pre-qualified for the remaining work packages. When contacted, a UEM Builders Bhd spokesman said the company was “considering” pursuing the other packages in the entire project but did not elaborate.
Kenanga’s Yeow said yesterday’s signing between the parties would serve as a “benchmark” for other key government projects to be sped up. “It bodes well for the economy because then, domestic spending is able to compensate for weaker export sales which is what the Government intended in the first place to counter a major slowdown in economic growth,” he said.
The bulk of the tunnel project cost will be financed through a loan from the Japan International Corp Agency (JICA) while the rest will be funded by a federal government grant.
Once the tunnel is completed, Selangor would have to pay RM80mil a year to the Pahang government for water.
Tuesday, May 5, 2009
Major construction projects awaiting government decision
4/5/2009 The Star
Edited
THERE is urgency for a heightened pace of construction works flowing to keep at least one economic component pumping hard. With a new Cabinet line-up and by-elections (almost) out-of-the-way, we anticipate a refocus on development priorities.
Of the RM7bil first fiscal stimulus unveiled in November, only RM2.4bil worth of projects was awarded as at April 17. Of this, RM350mil has been spent; the balance is still “work-in-progress”.
Plans are for a total RM5.2bil worth of projects to be awarded by June, and a full roll-out of RM7bil (38,000 projects) by August. Of the RM7bil first fiscal stimulus, we estimate the construction component to be RM4.6bil.
As for the RM60bil mini-Budget unveiled in March, RM15bil is fiscal allocation (RM10bil development, RM5bil operating), direct from the government’s coffers. The RM60bil mini-Budget offers RM11bil worth of works; the largest being the RM2bil LCCT, KLIA.
The 9MP, too, is not forgotten. Of the RM230bil 9MP allocation for development for 2006-2010, only RM119bil has been spent as at end-2008, implying a potential RM111bil spending over 2009-2010 assuming the RM230bil is maintained.
For 2009, government’s gross development spending was projected at RM56.7bil (2008: RM42.8bil) before imputing the stimulus allocations. Including the second fiscal stimulus package, this would reach RM60bil in 2010.
We expect a heightened pace of construction tenders and awards from mid-2009. Major projects awaiting decisions are the Pahang-Selangor water transfer (decided oredi May 2009, Shimizu-Nishimatsu-IJM-UEM consortium awarded the job - Ed) and Klang Valley LRT system. The government has clearly no problem in fund raising, without the distraction of a banking crisis, as in 1998.
Year-to-date, RM30.5bil worth of MGS-GIS has been issued, out of a total RM95bil estimated for 2009. Of the RM95bil, RM42bil is for refinancing while the balance RM53bil is new financing.
The RM30.5bil issued is already more than half of the official projected budget deficit of RM53.8bil for 2009. This should be sufficient for the immediate roll-out of construction packages.
More focus on east Malaysia
Higher allocations under the 9MP and second fiscal stimulus, and the new Cabinet line-up imply “urgency” for more infrastructure development in Sabah and Sarawak.
Of the RM10bil development allocation under the RM60bil mini-Budget, Sarawak has the highest allocation of RM1.2bil while Sabah’s allocation was the sixth largest. Sarawak Corridor of Renewable Energy (Score) and Sabah Development Corridor remain very relevant and we expect more construction works in Sabah and Sarawak.
We expect more positive news flow benefiting construction by mid-2009, with more mid-sized contracts of less than RM500mil each to lead the momentum for construction.
Top on the list of potential beneficiaries are contractors with long experience, excellent delivery track records and strong balance sheets to carry the weight of a turnkey contractor.
Our top picks for contractors of mid-sized projects are WCT and IJM Corp, which we upgraded to “buy” last week. Increasing momentum of works at Sarawak should benefit home-grown contractors like Hock Seng Lee (HSL) and Naim Cendera.We expect HSL, (outstanding order book of RM1.27bil), to record strong earnings growth in 2009 (+>20% year-on-year), while further job wins should sustain earnings into 2010.We upgrade HSL to a “buy”.
We also expect Loh & Loh to gain from water- and energy-related works under Score.
WCT and IJM Corp, which have built up good track records, could benefit in Sabah.
Gamuda remains known for its construction ability in mega projects – SSP3 in 1999 and SMART in 2002 - and we think Gamuda may play a lead role in the Klang Valley LRT works.
However, it is a little early to review our “hold” call on the stock.
Our TP is raised after removing a 20% discount to our unchanged RNAV of RM2.50/sh.
Edited
THERE is urgency for a heightened pace of construction works flowing to keep at least one economic component pumping hard. With a new Cabinet line-up and by-elections (almost) out-of-the-way, we anticipate a refocus on development priorities.
Of the RM7bil first fiscal stimulus unveiled in November, only RM2.4bil worth of projects was awarded as at April 17. Of this, RM350mil has been spent; the balance is still “work-in-progress”.
Plans are for a total RM5.2bil worth of projects to be awarded by June, and a full roll-out of RM7bil (38,000 projects) by August. Of the RM7bil first fiscal stimulus, we estimate the construction component to be RM4.6bil.
As for the RM60bil mini-Budget unveiled in March, RM15bil is fiscal allocation (RM10bil development, RM5bil operating), direct from the government’s coffers. The RM60bil mini-Budget offers RM11bil worth of works; the largest being the RM2bil LCCT, KLIA.
The 9MP, too, is not forgotten. Of the RM230bil 9MP allocation for development for 2006-2010, only RM119bil has been spent as at end-2008, implying a potential RM111bil spending over 2009-2010 assuming the RM230bil is maintained.
For 2009, government’s gross development spending was projected at RM56.7bil (2008: RM42.8bil) before imputing the stimulus allocations. Including the second fiscal stimulus package, this would reach RM60bil in 2010.
We expect a heightened pace of construction tenders and awards from mid-2009. Major projects awaiting decisions are the Pahang-Selangor water transfer (decided oredi May 2009, Shimizu-Nishimatsu-IJM-UEM consortium awarded the job - Ed) and Klang Valley LRT system. The government has clearly no problem in fund raising, without the distraction of a banking crisis, as in 1998.
Year-to-date, RM30.5bil worth of MGS-GIS has been issued, out of a total RM95bil estimated for 2009. Of the RM95bil, RM42bil is for refinancing while the balance RM53bil is new financing.
The RM30.5bil issued is already more than half of the official projected budget deficit of RM53.8bil for 2009. This should be sufficient for the immediate roll-out of construction packages.
More focus on east Malaysia
Higher allocations under the 9MP and second fiscal stimulus, and the new Cabinet line-up imply “urgency” for more infrastructure development in Sabah and Sarawak.
Of the RM10bil development allocation under the RM60bil mini-Budget, Sarawak has the highest allocation of RM1.2bil while Sabah’s allocation was the sixth largest. Sarawak Corridor of Renewable Energy (Score) and Sabah Development Corridor remain very relevant and we expect more construction works in Sabah and Sarawak.
We expect more positive news flow benefiting construction by mid-2009, with more mid-sized contracts of less than RM500mil each to lead the momentum for construction.
Top on the list of potential beneficiaries are contractors with long experience, excellent delivery track records and strong balance sheets to carry the weight of a turnkey contractor.
Our top picks for contractors of mid-sized projects are WCT and IJM Corp, which we upgraded to “buy” last week. Increasing momentum of works at Sarawak should benefit home-grown contractors like Hock Seng Lee (HSL) and Naim Cendera.We expect HSL, (outstanding order book of RM1.27bil), to record strong earnings growth in 2009 (+>20% year-on-year), while further job wins should sustain earnings into 2010.We upgrade HSL to a “buy”.
We also expect Loh & Loh to gain from water- and energy-related works under Score.
WCT and IJM Corp, which have built up good track records, could benefit in Sabah.
Gamuda remains known for its construction ability in mega projects – SSP3 in 1999 and SMART in 2002 - and we think Gamuda may play a lead role in the Klang Valley LRT works.
However, it is a little early to review our “hold” call on the stock.
Our TP is raised after removing a 20% discount to our unchanged RNAV of RM2.50/sh.
Monday, April 20, 2009
Govt ramping up construction sector
Tuesday April 14, 2009
Govt ramping up construction sector
By IZWAN IDRIS
PETALING JAYA: The construction industry, which saw a dearth of jobs last year, has caught a glimpse of up-coming jobs from the stimulus spending this year.
This will be counter-cyclical in the sense that while the industry shrank last year, it may expand in a year of economic slowdown as the Government ramps up construction to offset negative growth in other sectors.
Analysts sense this impending recovery.
CIMB Research last week said IJM Corp Bhd was eyeing nine major contracts worth at least RM9.4bil in total.Eight are domestic projects. These include
the job to build a hospital in Putrajaya,
two packages involving the Pahang-Selangor interstate water project,
the West Coast Expressway,
the new low-cost carrier terminal in Sepang,
work related to the Penang Second Bridge project and
upcoming contracts to extend the existing two light rail transit (LRT) lines in the Klang Valley.
Contracts to extend the existing two LRT lines in the Klang Valley are among the upcoming projects.
All these contracts are in various stages of negotiations, and tenders for some of these projects are yet to be called. Other companies were also reported to be in the running for some of the projects being targeted by IJM. The prospective IJM job list gave some insight into the value of big domestic construction works that are in the pipeline. Recently, WCT Bhd was reported to be in the process of finalising some RM500mil worth of jobs in Sabah.
There is also talk about a new LRT line being planned to link Kota Damansara and Cheras that is estimated to cost RM30bil. This project, like some of the other upcoming jobs, should attract fierce bidding from the big contractors when it becomes available.
While the prospect of big projects coming in has fuelled investors’ imagination in the past weeks, an analyst at RHB Research Institute has a more sober view of the sector.“Generally, we continue to find it difficult to be positive on the sector over the short term,’’ the firm said in report yesterday. The key reasons for its lack of enthusiasm centred on the argument that the projects planned under the two stimulus packages were mostly small in size. The lack of availability of funds at the right price also remained a major hurdle for most private financing initiatives to take off.
RHB Research said that as focus shifted to rolling out projects under the two stimulus packages, it “believed certain highly anticipated mega projects” under the Ninth Malaysian Plan might be put on the backburner, or postponed to the 10th Malaysia Plan. The firm, however, acknowledged increased investors’ appetite for risk, and had assigned higher target prices for construction stocks under its coverage to reflect this. Fund managers are aware of this mood of recovery. Hence, share prices of the big contractors which have been rising, continued to edge higher yesterday, as they shrugged off concerns that prices of counters like IJM, Gamuda Bhd and Malaysian Resources Corp Bhd (MRCB) might have gone up too fast and too soon.
A key factor in driving up investors’ buying binge in recent weeks was high expectation that the pump-priming agenda of the new administration of Prime Minister Datuk Seri Najib Tun Razak would result in increased big construction job flow in the coming months.
Analysts, however, seem to prefer to wait and see if some of these “highly anticipated” projects materialise first. “We maintain our ‘neutral’ call (on the construction sector) as there is a lack of re-rating catalysts in sight,’’ ECM Libra Investment Research said in an update. “Key risks going forward include below-trend order book replenishment as well as implementation risks.’’
But investors are already betting that companies like IJM, Gamuda, MRCB and WCT will emerge winners.
IJM’s share price climbed six sen to RM4.70 yesterday – its highest level since mid-September last year. The stock has risen 67% since the start of the year, but is still a long way off its peak of RM8.82 reached in February 2007. Shares in Gamuda and MRCB advanced yesterday, with both stocks now chalking up year-to-date gains of 29% and 45% respectively. WCT, whose shares were clobbered in January, has also recovered strongly.
Govt ramping up construction sector
By IZWAN IDRIS
PETALING JAYA: The construction industry, which saw a dearth of jobs last year, has caught a glimpse of up-coming jobs from the stimulus spending this year.
This will be counter-cyclical in the sense that while the industry shrank last year, it may expand in a year of economic slowdown as the Government ramps up construction to offset negative growth in other sectors.
Analysts sense this impending recovery.
CIMB Research last week said IJM Corp Bhd was eyeing nine major contracts worth at least RM9.4bil in total.Eight are domestic projects. These include
the job to build a hospital in Putrajaya,
two packages involving the Pahang-Selangor interstate water project,
the West Coast Expressway,
the new low-cost carrier terminal in Sepang,
work related to the Penang Second Bridge project and
upcoming contracts to extend the existing two light rail transit (LRT) lines in the Klang Valley.
Contracts to extend the existing two LRT lines in the Klang Valley are among the upcoming projects.
All these contracts are in various stages of negotiations, and tenders for some of these projects are yet to be called. Other companies were also reported to be in the running for some of the projects being targeted by IJM. The prospective IJM job list gave some insight into the value of big domestic construction works that are in the pipeline. Recently, WCT Bhd was reported to be in the process of finalising some RM500mil worth of jobs in Sabah.
There is also talk about a new LRT line being planned to link Kota Damansara and Cheras that is estimated to cost RM30bil. This project, like some of the other upcoming jobs, should attract fierce bidding from the big contractors when it becomes available.
While the prospect of big projects coming in has fuelled investors’ imagination in the past weeks, an analyst at RHB Research Institute has a more sober view of the sector.“Generally, we continue to find it difficult to be positive on the sector over the short term,’’ the firm said in report yesterday. The key reasons for its lack of enthusiasm centred on the argument that the projects planned under the two stimulus packages were mostly small in size. The lack of availability of funds at the right price also remained a major hurdle for most private financing initiatives to take off.
RHB Research said that as focus shifted to rolling out projects under the two stimulus packages, it “believed certain highly anticipated mega projects” under the Ninth Malaysian Plan might be put on the backburner, or postponed to the 10th Malaysia Plan. The firm, however, acknowledged increased investors’ appetite for risk, and had assigned higher target prices for construction stocks under its coverage to reflect this. Fund managers are aware of this mood of recovery. Hence, share prices of the big contractors which have been rising, continued to edge higher yesterday, as they shrugged off concerns that prices of counters like IJM, Gamuda Bhd and Malaysian Resources Corp Bhd (MRCB) might have gone up too fast and too soon.
A key factor in driving up investors’ buying binge in recent weeks was high expectation that the pump-priming agenda of the new administration of Prime Minister Datuk Seri Najib Tun Razak would result in increased big construction job flow in the coming months.
Analysts, however, seem to prefer to wait and see if some of these “highly anticipated” projects materialise first. “We maintain our ‘neutral’ call (on the construction sector) as there is a lack of re-rating catalysts in sight,’’ ECM Libra Investment Research said in an update. “Key risks going forward include below-trend order book replenishment as well as implementation risks.’’
But investors are already betting that companies like IJM, Gamuda, MRCB and WCT will emerge winners.
IJM’s share price climbed six sen to RM4.70 yesterday – its highest level since mid-September last year. The stock has risen 67% since the start of the year, but is still a long way off its peak of RM8.82 reached in February 2007. Shares in Gamuda and MRCB advanced yesterday, with both stocks now chalking up year-to-date gains of 29% and 45% respectively. WCT, whose shares were clobbered in January, has also recovered strongly.
Thursday, November 27, 2008
Pahang-Selangor water transfer hangs in balance
KUALA LUMPUR, Nov 27 – The Pahang-Selangor water transfer project hangs in the balance over the question of whether the Malaysian government or Japan has the final say on which consortium is awarded the lucrative contract to bore a 45km tunnel through the Titiwangsa Range. At stake also is a RM2.5 billion soft loan from the Japan Bank for International Cooperation (JBIC).
The Malaysian Insider has learnt that the Cabinet and officials from the Ministry of Energy, Water and Communications are resisting attempts by the Japanese International Cooperation Agency to influence the choice of the successful bidder for the contract. Government officials have been tight-lipped about the behind-the-scenes wrangling but Datuk Joseph Salang Gandum’s comment in Parliament last week gave a hint of the seriousness of the issue.
When asked to give an update on the soft loan from Japan Bank for International Cooperation (JBIC) and the status of the water transfer project, he remarked: “Malaysia is a sovereign country and will not sell its dignity and name…the government already has plans if the money is not channelled to us due to certain reasons.”
Checks show that three bids for the project were received from: Shimizu-Nishimatsu-UEM-IJM; Taisei-HRA Teguh and Kajima Construction. From the start, the government made it clear that tender for the water transfer project should be a benchmark for open tenders in the country. The Ministry of Energy, Water and Communications came up with an international competitive bidding scheme to select a international consultants who would scrutinise the bids. It is understood that two of the bidders submitted conditional bids.
Under the international tender process, any company or party that submits a conditional bid should be disqualified. This is because the price quoted in the conditional bid could change substantially. For example, the lowest bidder for the 45-km tunnel job submitted a conditional bid that was based on a particular rock strength of the tunnel. But independent reports obtained by the government suggest that the rock strength is higher than what the cost estimates are based on.
As such, the government believes that it could be saddled with a variation order of several hundred million ringgit if it awards the contract to the consortium with the lowest bid.
It is in favour of awarding the contract for the project to the company which had submitted the second lowest bid, which was also the only bidder who did not submit a conditional tender.
But JICA is insisting that the contract be awarded to the lowest bidder.
The Malaysian Insider understands that the Cabinet was briefed on the stand off and supports the decision of the Energy, Water and Communications ministry to award the contract to the second bidder.
A government official told The Malaysian Insider: “The terms in the bid documents state clearly that we are not bound to accept the lowest bid but must take into account all factors in the tender. Accepting a conditional bid could be disastrous for the government. Based on our research, there is every chance of a variation order between RM200 million to RM400 million.” It is understood that the difference between the lowest and second bid is RM150 million. JICA has apparently asked the government to negotiate with the party with the lowest tender and get them to remove the “variable component” of the bid.
Government officials believe that going down this path could lead to suits by the two other companies that took part in the tender process. The reason: there is a clause which states that no party can alter, correct or withdraw anything from their bid documents once it has been opened and evaluated.
So the standoff continues. But it is learnt that government officials are willing to forego the Japanese loan. “This is an issue of sovereign rights. Malaysia will be a joke if we have a open tender but don’t follow the rules of the game.” It is unclear how the government plans to raise the RM1.5 billion for the tunnel project if the loan falls through.
The Malaysian Insider has learnt that the Cabinet and officials from the Ministry of Energy, Water and Communications are resisting attempts by the Japanese International Cooperation Agency to influence the choice of the successful bidder for the contract. Government officials have been tight-lipped about the behind-the-scenes wrangling but Datuk Joseph Salang Gandum’s comment in Parliament last week gave a hint of the seriousness of the issue.
When asked to give an update on the soft loan from Japan Bank for International Cooperation (JBIC) and the status of the water transfer project, he remarked: “Malaysia is a sovereign country and will not sell its dignity and name…the government already has plans if the money is not channelled to us due to certain reasons.”
Checks show that three bids for the project were received from: Shimizu-Nishimatsu-UEM-IJM; Taisei-HRA Teguh and Kajima Construction. From the start, the government made it clear that tender for the water transfer project should be a benchmark for open tenders in the country. The Ministry of Energy, Water and Communications came up with an international competitive bidding scheme to select a international consultants who would scrutinise the bids. It is understood that two of the bidders submitted conditional bids.
Under the international tender process, any company or party that submits a conditional bid should be disqualified. This is because the price quoted in the conditional bid could change substantially. For example, the lowest bidder for the 45-km tunnel job submitted a conditional bid that was based on a particular rock strength of the tunnel. But independent reports obtained by the government suggest that the rock strength is higher than what the cost estimates are based on.
As such, the government believes that it could be saddled with a variation order of several hundred million ringgit if it awards the contract to the consortium with the lowest bid.
It is in favour of awarding the contract for the project to the company which had submitted the second lowest bid, which was also the only bidder who did not submit a conditional tender.
But JICA is insisting that the contract be awarded to the lowest bidder.
The Malaysian Insider understands that the Cabinet was briefed on the stand off and supports the decision of the Energy, Water and Communications ministry to award the contract to the second bidder.
A government official told The Malaysian Insider: “The terms in the bid documents state clearly that we are not bound to accept the lowest bid but must take into account all factors in the tender. Accepting a conditional bid could be disastrous for the government. Based on our research, there is every chance of a variation order between RM200 million to RM400 million.” It is understood that the difference between the lowest and second bid is RM150 million. JICA has apparently asked the government to negotiate with the party with the lowest tender and get them to remove the “variable component” of the bid.
Government officials believe that going down this path could lead to suits by the two other companies that took part in the tender process. The reason: there is a clause which states that no party can alter, correct or withdraw anything from their bid documents once it has been opened and evaluated.
So the standoff continues. But it is learnt that government officials are willing to forego the Japanese loan. “This is an issue of sovereign rights. Malaysia will be a joke if we have a open tender but don’t follow the rules of the game.” It is unclear how the government plans to raise the RM1.5 billion for the tunnel project if the loan falls through.
Friday, August 15, 2008
Interstate water tunnelling
Contractor picked for interstate water tunnelling job
By Ooi Tee Ching
Published: 2008/08/15
BTimes
THE government has decided on the contractor to undertake the 45km tunnelling package of the Pahang-Selangor interstate Raw Water transfer project. The job will be awarded next month.The multi-billion ringgit project involves the construction of the Kelau dam in Pahang and a 44.6km transfer tunnel under the Main Range to bring 2,260 million litres of raw water per day to Hulu Langat treatment plant in Selangor. "The Finance Ministry has approved of the contractor to undertake the tunnelling package," said Energy, Water and Communications Minister Datuk Shaziman Abu Mansor. "We will recommend to JBIC (the Japan Bank for International Co-operation) and the announcement will be made next month," he told reporters after officiating at the opening of the National Solar Photovoltaic conference in Putrajaya yesterday.
In March 2005, the government signed a 82.04 billion yen loan (RM) with JBIC for the project. The loan was to be repaid over 40 years, with an annual interest rate of 0.95 per cent. However, the government can only activate the loan after completing the pre-qualification and tender process. It was reported that three Japanese firms have been shortlisted to carry out the tunnelling package; Shimizu Corp which has UEM group and IJM Corp Bhd as its partners, Taisei Corp (with HRA Teguh Sdn Bhd) and a stand-alone bid by Kajima Corp. Initially slated to commence in 2003, this project was met with protests from both local and international non-governmental organisations like the Centre of Orang Asli Concerns, Sahabat Alam Malaysia and Friends of the Earth-Japan. Due to the protests, the project period had to be revised twice, first to 2005-2012 and then 2008-2015.
By Ooi Tee Ching
Published: 2008/08/15
BTimes
THE government has decided on the contractor to undertake the 45km tunnelling package of the Pahang-Selangor interstate Raw Water transfer project. The job will be awarded next month.The multi-billion ringgit project involves the construction of the Kelau dam in Pahang and a 44.6km transfer tunnel under the Main Range to bring 2,260 million litres of raw water per day to Hulu Langat treatment plant in Selangor. "The Finance Ministry has approved of the contractor to undertake the tunnelling package," said Energy, Water and Communications Minister Datuk Shaziman Abu Mansor. "We will recommend to JBIC (the Japan Bank for International Co-operation) and the announcement will be made next month," he told reporters after officiating at the opening of the National Solar Photovoltaic conference in Putrajaya yesterday.
In March 2005, the government signed a 82.04 billion yen loan (RM) with JBIC for the project. The loan was to be repaid over 40 years, with an annual interest rate of 0.95 per cent. However, the government can only activate the loan after completing the pre-qualification and tender process. It was reported that three Japanese firms have been shortlisted to carry out the tunnelling package; Shimizu Corp which has UEM group and IJM Corp Bhd as its partners, Taisei Corp (with HRA Teguh Sdn Bhd) and a stand-alone bid by Kajima Corp. Initially slated to commence in 2003, this project was met with protests from both local and international non-governmental organisations like the Centre of Orang Asli Concerns, Sahabat Alam Malaysia and Friends of the Earth-Japan. Due to the protests, the project period had to be revised twice, first to 2005-2012 and then 2008-2015.
Monday, August 11, 2008
Selangor to honour water pact with Pahang
Selangor to honour water pact with Pahang
By Ooi Tee Ching
Published: 2008/08/11
Business Times
SELANGOR, now ruled by the Pakatan Rakyat, will maintain the purchase price of raw water under the Pahang-Selangor water transfer project at 10 sen per 1,000 litres."We honour the contract signed with the Pahang state government and we stick to the raw water purchase rate," said Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim.In November 2007, Pahang signed a contract with the previous Selangor administration to supply raw water to Selangor at 10 sen per 1,000 litres of water from the Pahang-Selangor Inter-State Raw Water Transfer Project.Pahang is expected to receive an annual income of RM82.5 million from the water sale to Selangor. Once implemented, the rate is to be reviewed every five years.
The Pahang-Selangor raw water transfer project involves developing water resources in Pahang and constructing a 45km tunnel to transport water to water-starved Selangor to host its diverse industries."I was informed that the pipe linkage between Pahang and Selangor could materialise by 2012," Khalid said.He was speaking to reporters after a working visit to the Sungai Semenyih Water Treatment Plant and Labs at Putrajaya over the weekend.The treatment plant is being operated and maintained by Konsortium Abass Sdn Bhd, a 55 per cent subsidiary of Kumpulan Perangsang Selangor Bhd.
Asked on the progress of the state government taking over all four companies involved in the treatment and distribution of water in Selangor, he replied: "We hope to complete the restructuring by the end of the year."The four companies are Puncak Niaga Holdings Bhd, Syarikat Bekalan Air Selangor (Syabas) Sdn Bhd, Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash).Puncak Niaga's 70 per cent subsidiary Syabas distributes water in Selangor and owns 29 water treatment plants.Splash, which is 40 per cent-owned by Gamuda Bhd, is the concessionaire of the Sungai Selangor Water Supply Scheme Phase 1 and 3. As the nation's largest water supplier, Splash is capable of treating 2,000 million litres per day.
By Ooi Tee Ching
Published: 2008/08/11
Business Times
SELANGOR, now ruled by the Pakatan Rakyat, will maintain the purchase price of raw water under the Pahang-Selangor water transfer project at 10 sen per 1,000 litres."We honour the contract signed with the Pahang state government and we stick to the raw water purchase rate," said Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim.In November 2007, Pahang signed a contract with the previous Selangor administration to supply raw water to Selangor at 10 sen per 1,000 litres of water from the Pahang-Selangor Inter-State Raw Water Transfer Project.Pahang is expected to receive an annual income of RM82.5 million from the water sale to Selangor. Once implemented, the rate is to be reviewed every five years.
The Pahang-Selangor raw water transfer project involves developing water resources in Pahang and constructing a 45km tunnel to transport water to water-starved Selangor to host its diverse industries."I was informed that the pipe linkage between Pahang and Selangor could materialise by 2012," Khalid said.He was speaking to reporters after a working visit to the Sungai Semenyih Water Treatment Plant and Labs at Putrajaya over the weekend.The treatment plant is being operated and maintained by Konsortium Abass Sdn Bhd, a 55 per cent subsidiary of Kumpulan Perangsang Selangor Bhd.
Asked on the progress of the state government taking over all four companies involved in the treatment and distribution of water in Selangor, he replied: "We hope to complete the restructuring by the end of the year."The four companies are Puncak Niaga Holdings Bhd, Syarikat Bekalan Air Selangor (Syabas) Sdn Bhd, Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash).Puncak Niaga's 70 per cent subsidiary Syabas distributes water in Selangor and owns 29 water treatment plants.Splash, which is 40 per cent-owned by Gamuda Bhd, is the concessionaire of the Sungai Selangor Water Supply Scheme Phase 1 and 3. As the nation's largest water supplier, Splash is capable of treating 2,000 million litres per day.
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