If you have ever visited Kuala Lumpur in Malaysia, you will know that the city?s traffic conditions have plenty of room for improvement.
In 2010, the Malaysia government announced a project that could help improve the city?s traffic: A three-line mass rapid transit system (MRT) to be built in the Greater Kuala Lumpur region.
It is one of the largest infrastructure projects ever attempted in Malaysia and many listed companies on Bursa Malaysia, Malaysia?s stock exchange, are fighting for a share of the pie. Here are some of the key players that you might want to keep an eye on.
If you have ever visited Kuala Lumpur in Malaysia, you will know that the city’s traffic conditions have plenty of room for improvement.
In 2010, the Malaysia government announced a project that could help improve the city’s traffic: A three-line mass rapid transit system (MRT) to be built in the Greater Kuala Lumpur region.
It is one of the largest infrastructure projects ever attempted in Malaysia and many listed companies on Bursa Malaysia, Malaysia’s stock exchange, are fighting for a share of the pie. Here are some of the key players that you might want to keep an eye on.
The sums involved
The construction of the three MRT lines is coordinated by MRT Corp Sdn Bhd, a company solely owned by Malaysia’s Ministry of Finance. Contracts for Line 1 have been fully awarded and construction for it is nearing the last stages.
MRT Corp had also announced that Line 1’s construction came in within the budget of RM30 billion. According to the latest budget released by Malaysia’s government, the Line 2 project is expected to cost around RM28 billion and would be completed by 2022. Although there is no confirmed figure for Line 3 yet, it can be safely assumed that the combined costs for the three lines would be above RM60 billion.
MMC-Gamuda KVMRT (PDP) Sdn Bhd has been appointed the Project Delivery Partner for the project and it is also one of the key contractors for the whole project. MMC-Gamuda KVMRT is a joint venture between MMC Corporation Berhad (KLSE:2194.KL) and Gamuda Berhad (KLSE:5398.KL). Both companies are some of the largest infrastructure contractors in Malaysia. The duo, via a previous joint venture company MMC-Gamuda, can also lay claim to be one of the main contractors with tunneling expertise in the country.
Although both MMC Corporation and Gamuda are considered to be blue chip stocks in Malaysia’s stock market, the MRT project is still a very significant job for them.
To put things into perspective, Gamuda has a market capitalization of RM11.6 billion and generated RM2.5 billion in revenue in its last financial year. MMC Corporation on the other hand, has a market capitalization of RM6.5 billion and had earned revenue of RM3.0 billion.
Yet, for the Line 2 project alone, MMC-Gamuda KVMRT had recently won a package worth RM15.47 billion. The work includes “Construction and Completion of Tunnels, Stations and Associated Structures from Jalan Ipoh North Escape Shaft to Desa Waterpark South Portal.”
From the above figures, investors can see that the contracts are very substantial for the two companies. Moreover, there are already plans for the future extension of the MRT lines even after the three main lines are completed. And, this does not even concern the High-Speed Rail link project that will run from Kuala Lumpur to Singapore.
Although Malaysia’s political situation has been messy recently and its currency has been volatile, the outlook for infrastructure projects in the country still looks really bright.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own shares in the companies mentioned above.