Construction sector
Maintain overweight: Business Times reported that Malaysia and Singapore may proceed to sign the bilateral agreement for the proposed KL-Singapore High Speed Rail (HSR) by the third quarter this year (3Q15).

This follows earlier comments by Land Public Transport Commission (SPAD) chairman Tan Sri Syed Hamid Albar last October that Malaysia had started finalising details with Singapore on the upcoming HSR project by the first quarter of 2015 (1Q15).

Feasibility studies for the project have been submitted to both governments. A meeting will be held early this year to finalise the details.

Meanwhile, we understand that planning details for the KL-Singapore link have entered the advanced stages. The route’s alignment and resolution of technical considerations are in the works.

A single border checkpoint — by the Singapore and Malaysia Customs, Immigration and Quarantine (CIQ) complexes sited within the same location — has also been mooted.

Similarly, all points of agreement for technical matters are to be resolved during the current quarter.

This should subsequently pave the way for the bilateral agreement to be consummated, earliest by June or in 3Q15.

The Malaysian government is in the process of evaluating various HSR systems that meet its expectations, including those from Europe, China and Japan.

From the Malaysian end, seven stations have been identified for the HSR route in Kuala Lumpur, Putrajaya, Seremban (Negri Sembilan), Air Keroh (Melaka), Muar, Batu Pahat and Nusajaya (Johor). The main terminal will be located in Bandar Malaysia.

Singapore has outlined three possible locations on the island state — Tuas West, Jurong East and the city centre.

If the project is implemented via a private financing initiative (PFI), we believe Gamuda Bhd could be in the mix given its proven niche in executing high impact rail projects and its strong balance sheet.

Previous press reports indicated that at least three bidders have shown interest in the project — UEM Sunrise Bhd, MMC Corp Bhd and YTL Corp Bhd.

However, the exact funding structure needs to be ironed out before the HSR project — due to be completed by 2020 — actually takes off, given by the need for the Malaysian government to preserve its fiscal targets in light of declining oil prices.

All said, we believe the other big ticket rail-related jobs such as the Klang Valley Mass Rapid Transit 2 and Light Rail Transit 3, will forge ahead.

The MMC-Gamuda joint venture has already been appointed as the project delivery partner for the latter. — AmResearch Sdn Bhd, Jan 13

This article first appeared in The Edge Financial Daily, on January 14, 2015.