5 days ago
Construction sector eyes growth with PML tender
CIMB Research believes the spotlight had shifted to the hotly contested systems package.
PETALING JAYA: The construction sector looks poised for a new growth cycle as the systems package for the Penang Mutiara Line (PML) light rail transit (LRT) project approached a critical tender stage, expected to benefit seasoned infrastructure players with proven track records and strong balance sheets.
Aimed at transforming Penang's urban mobility, the PML is a 29.5 km LRT system linking Komtar to Silicon Island, with a planned extension to Penang Sentral via a five km long bridge.
MRT Corp, the project owner, was set to call for tenders for the bridge section by October 2025, according to a recent media report. Advanced works on the main civil stretch between Komtar and Silicon Island were due to begin this month.
CIMB Research believed the spotlight had shifted to the hotly contested systems package, noting: 'Nevertheless, we opine that the near-term focus centres on the highly awaited systems package of the PML that has attracted attention from local and international contractors alike.'
It was reported that at least seven consortia submitted bids for the systems contract, which includes rolling stock, signalling, and track components.
MRT Corp's stringent eligibility requirements – such as RM500mil worth of urban rail experience in the past decade and local manufacturing presence – helped narrow the field to heavyweights with established rail credentials.
The research house observed that 'bids requiring the least financial commitment from the government would gain the upper hand', especially since the contract involved capital expenditure and long-term leasing and maintenance obligations, possibly extending up to 30 years. Among the front-runners, Gamuda Bhd teamed up with China Railway Rolling Stock Corp (CRRC), which operates a plant in Batu Gajah, and Japan's Hitachi for signalling.
MMC Engineering partnered with Hyundai Rotem for rolling stock, Hitachi for signalling, and Emrail for track works.
YTL Group's consortium included CRRC, Siemens, and Emrail.
Other notable bids came from Berjaya Rail with a China-based partner and Hitachi; a joint venture between Lion Pacific and WCT Holdings Bhd involving China High Speed Rail Co, Siemens, and China Harbour Engineering; Malaysian Resource Corp Bhd (MRCB) with Alstom; and Dhaya Maju Infrastructure Asia with Siemens and CRRC.
'Some of the bidders played a leading role during the construction of Klang Valley's urban rail and metro systems,' CIMB Research pointed out, noting that MMC-Gamuda built the Klang Valley's Kajang and Putrajaya mass rapid transit lines, while MRCB was progressing well on Phase 1 of the LRT3 and had secured a RM2.5il turnkey deal for Phase 2.
CIMB Research noted that 'the systems package is estimated to cost less than RM3.5bil, although the research house believe the figure could be higher after incorporating the leasing/maintenance components.'
With Siemens and Hyundai Rotem having previously assembled MRT rolling stock at the SMH Rail plant in Rawang, local assembly capacity could again prove decisive.
MMC Engineering and Hyundai Rotem proposed building a new rolling stock facility in Malaysia, a move that could enhance localisation and ease financing commitments.
Despite intense rivalry, CIMB Research flagged a potential surprise: 'While competition remains rife, we postulate that MRCB could emerge as the dark horse for the systems package.'
Citing the group's healthy net gearing of 27% and solid infrastructure credentials, the firm noted that MRCB was also 'well-positioned to benefit from the Butterworth link', which could boost the value of its wholly-owned Penang Sentral project.
Gamuda, meanwhile, continued to bolster its rail credentials through ongoing civil works on the Komtar–Silicon Island stretch, leveraging its proven track record in delivering turnkey projects domestically and abroad.
