Following Barisan Nasional election victory big rail projects to get more traction now

PETALING JAYA: The development of various multi-billion rail
infrastructure projects are expected to gain better clarity and
speedier traction now, following the victory of the Barisan Nasional
coalition in Sunday's general election, industry players said.
Construction stocks were going through a lull due to uncertainty over the general election.
But
analysts said that with these fears removed, the construction sector
would be a clear beneficiary. Research houses have highlighted the
construction sector as one of the positive performers going forward,
following the results of the general election.
RHB Research
said in its report: The (construction) sector will now steer clear of
potential radical changes proposed by the Pakatan Rakyat coalition that
could have hurt earnings and fundamentals including a review of
MRT-related contracts.”
Analysts said the dishing out of more rail-related projects are to be expected in the later part of this year.
Some
of the pertinent rail infrastructure projects that are still in the
pipeline are the remaining two lines of the mass rapid transit (MRT)
network, the high-speed rail (HSR) connecting Kuala Lumpur and
Singapore, the Gemas to Johor Baru electrified double-tracking project
and the latest is another light rail transit (LRT) extension between
Petaling Jaya and Port Klang.
Currently, the Greater Kuala
Lumpur region is witnessing the ongoing construction of the RM23bil
Sungai Buloh-Kajang MRT project and the RM7bil LRT extension.
Land Public Transport Commission (SPAD) chief executive officer Mohd Nur Ismal Kamal told StarBiz
that the results of the recent elections injected more motivation for
SPAD to continue with the public transport transformation plan not only
for rail and the urban areas but for the rural areas in other states as
well.
“We are at the beginning of the transformation and I
believe the Government should be more inclined now to put in further
investment and stronger focus in public transport transformation going
forward,” he said.
Mass Rapid Transit Corp Sdn Bhd (MRT Corp) CEO Datuk Azhar Abdul Hamid
said: “Now, we can continue to work and support the Government as well
as carry on with the transformation programme for the benefit of the
people and country.
“We also need to continue to build on our nation's strength and overcome our weaknesses,” he said.
On the upcoming line 2 and 3 of the MRT, Azhar said the public should expect more news on this in the coming weeks or months.
“Our approval machinery will work on that with greater focus and priority now,” he said.
Syarikat Prasarana Negara Bhd group managing director Datuk Shahril Mokhtar
said that Prasarana would continue with efforts to further improve the
quality of public transportation and the sector's transformation plan.
On
the LRT line connecting Petaling Jaya to Port Klang, Shahril said that
Prasarana had just embarked on the studies and expected to complete it
in six months time before handing it to SPAD for a more detailed
feasibility study.
“We need to address this particular route based on the high-density population, travel pattern and congestion issue,” he said.
RHB
Research upgraded the construction sector to “overweight” from
“neutral” on the back of reduced risk premium following the victory of
the Barisan coalition.
“The sector will now steer clear of
potential radical changes proposed by the Pakatan Rakyat coalition that
could have hurt earnings and fundamentals including a review of
MRT-related contracts and abolition of toll roads. The risks of
cancellations, changes to terms and scopes of MRT-related contracts are
now greatly reduced,” it said in a report yesterday.
RHB
Research has also upgraded its one-year forward target
price-to-earnings ratio (PER) for construction stocks to 10 to 16 times
from eight to 13 times.
“Fair values of construction stocks
under our coverage are raised by 1% to 39% to reflect the unchanged to
higher multiples, coupled with the rolling forward of our valuation
base year to financial year 2014 from 2013,” it said.
Analysts at Public Bank Investment Bhd
said that following the BN win, the market would see more projects
being dished out such as MRT line 2 and 3, Gemas-Johor Baru electrified
double-tracking and Kuala Langat treatment plant among others.
“With
most construction companies busy in one way or another with the largest
infrastructure project, the Sungai Buloh-Kajang MRT, we believe most of
the jobs especially the rail projects will commence closer to 2017
which is closer to the completion date of the MRT first line.
After
clinching jobs worth RM28bil last year, we believe the sector could see
potential jobs worth at least half of what was achieved in 2012 to be
dished out this year,” they said.
By SHARIDAN M. ALI