Seven highways worth RM20bil expected to start work next year
KUALA LUMPUR: Work on seven new highways will start next year, offering jobs worth RM20bil for the construction sector.
This will also fill up the order books of construction companies that have been waning following the tail-end of the RM23bil Klang Valley mass rapid transit (MRT) project.
The seven highway projects are the RM1.18bil Duta-Ulu Kelang Expressway (DUKE) extension, the RM5.04bil West Coast Expressway (WCE) from Banting to Taiping, the RM2.5bil Kinrara-Damansara Expressway (Kidex), the RM1.5bil Kuala Lumpur Outer Ring Road (KLORR), the RM4.18bil Damansara-Shah Alam Expressway (DASH), the RM4.3bil Sungai Besi-Ulu Kelang Elevated Expressway (SUKE) and the Serdang-Kinrara-Putrajaya Highway (SKIP).
Works Minister Datuk Fadillah Yusuf said yesterday that work on the seven highways should start next year.
“Currently, most of the projects are in the process of seeking approvals from the state authorities and relevant bodies, as well as public consultation,” he told reporters after the opening ceremony of International Construction Week (ICW) 2014.
He said the impending DASH and Kidex projects were in a process of seeking public approval and the final approval from the state.
“If you look at Kidex, the promoters have received the feedback from the public for realignment … with the information, we now need to sit down and evaluate how to proceed with the project,” he added.
Kidex is a 14.9-km fully elevated expressway stretching between the NKVE Damansara Toll and Lebuhraya Bukit Jalil.
“For the WCE project, the approvals on the Perak side are more or less cleared. On the Selangor side, there could be some adjustment in the alignment following the public consultation,” Fadillah said.
The WCE project is from Banting in Selangor to Taiping, stretching over 233km of tolled highway.
Meanwhile, on the overall construction sector, Fadillah expects the industry to continue its double-digit growth in the second half of the year, on the back of mass ongoing construction activities from the private and public sectors.
“The construction industry will continue to be one of the prime movers of the Malaysian economy. We estimate that there would be more than RM110bil worth of projects this year,” he said.
For the first half of 2014, the Malaysian construction industry charted a strong growth of 14.3% against 12% in the same period last year, he said.
ICW 2014, from Sept 17 to 23, is organised by the Construction Industry Development Board Malaysia.
There are 300 exhibitors from 24 countries involved, including from the United Kingdom, South Korea and China, with 15,000 visitors expected.
While the construction sector’s performance was somewhat muted in the second quarter of this year, research houses remain positive on the sector’s momentum to drive earnings in the next few years.
RHB Research said although almost all construction companies delivered their numbers, there was a “lack of spark” in their latest quarterly results.
The research house remains optimistic on the sector, believing that its strong momentum of activities will be sustained, potentially driving medium-term sector earnings growth.
“We are unconcerned by the construction resources to be disengaged from the RM23bil Line 1 of the Klang Valley MRT project upon completion in mid-2015. We believe they will find their homes in the RM25bil Line 2 of the project, which is scheduled to start work in the first quarter of 2016,” the research house noted.
Among analysts covering the sector, Gamuda Bhd remains a top pick, being a proxy to the Klang Valley MRT project.
The other top themes for the sector, as RHB Research noted, were piling and public housing, to which Pintaras Jaya Bhd and Protasco Bhd are meaningful proxies, respectively.
In its roadshows in Kuala Lumpur, Singapore and Hong Kong, CIMB Research found that most fund managers concurred with its view that Gamuda could play catch-up in the second half of the year.
“Expectations are still high for Muhibbah Engineering Bhd securing packages in the Refinery and Petrochemical Integrated Development project in Pengerang, Johor. While still skeptical, investors were eager for the high-speed rail updates and keen to hear our opinion about YTL Corp Bhd’s advantage,” the analyst said.
CIMB Research opined that local investors were more interested in the timing of tenders and awards for the major domestic projects in the pipeline than Singaporean and Hong Kong investors.
“Some expressed concern over the perceived delay in MRT 2 approvals and project delivery partner, or PDP, appointment, but concurred with our view of a revival in the last quarter,” the research note said.
“We continue to recommend investors to accumulate Gamuda, as sentiment is warming up to a recovery in MRT 2 catalysts, likely in the fourth quarter, and given positive developments in the water takeover deal,” CIMB Research added.