IJM and AZRB awaiting letter of award for MRT project

Sunday, 29 January 2012 08:34

PETALING JAYA: Both IJM Corp Bhd and Ahmad Zaki Resources Bhd (AZRB) have said they are awaiting a formal letter of award (LoA) from MRT Corp for two elevated packages of the My Rapid Transit (MRT) Sungai Buloh-Kajang line.

In a statement to Bursa Malaysia, IJM Corp said its subsidiary IJM Construction Sdn Bhd had last December submitted a tender for the project and it would make an announcement upon receipt of the LoA.

AZRB made a similar disclosure to the stock exchange.

The announcements were made in response to a statement from MRT Corp on Thursday that IJM Corp and AZRB had been appointed the main contractors for package V5 and package V6 respectively of the MRT construction works.

IJM Corp is tasked with the construction and completion of a viaduct guideway and other associated works from the Maluri Portal to the Plaza Phoenix station worth RM974mil.

AZRB’s contract entails the construction and completion of a viaduct guideway and other associated works from Plaza Phoenix to Bandar Tun Hussein Onn station totalling RM764mil.

A viaduct guideway is an elevated guideway structure on which the tracks of MRT trains will be located.

“Both awards are subject to the successful tenderers accepting the letter of award to be issued by MRT Corp in due course,” the agency had said.

The matter of receiving the LoA had led to some concern as to whether IJM Corp and AZRB had in fact won the MRT contracts.

On why MRT Corp did not wait for the LoAs to be delivered before making its statement, a source familiar with the situation told StarBizWeek that the tender committee had made its decision on the awards and thereafter gave the go-ahead for the news to be made public.

Meanwhile, analysts said IJM Corp stood to benefit the most from the slew of national infrastructure project wins announced on Thursday, which included the long-awaited RM7.07bil West Coast Expressway.

Kumpulan Europlus Bhd’s (KEuro) 64.2%-owned subsidiary West Coast Expressway Sdn Bhd (WCE) had obtained the Government’s nod to build the 316km highway between Banting, Selangor, and Taiping, Perak. KEuro is a 23% subsidiary of IJM Corp.

A major portion, or 224km, of the highway will be tolled, while 92km will be toll-free. The project will be operated on a build-operate-transfer basis.

IJM Corp, KEuro and AZRB shares gained ground yesterday, with KEuro being the most actively traded, followed by AZRB and IJM Corp.

Percentage-wise, AZRB was the biggest winner, its stock jumping 15.5 sen, or 21%, to 89.5 sen, while IJM Corp added 25 sen, or 4.6%, to RM 5.70 and KEuro rose five sen, or 3.8%, to RM1.36.

In a note to clients, CIMB Research analyst Sharizan Rosely said the awards should pave the way for more active newsflow on projects in the first half of the year.

“Packages V5 and V6 are among the eight elevated packages to be awarded in 2012, three of which are designated for bumiputra contractors. For the West Coast Expressway, we think the formal award to IJM Corp and subsequent awards to subcontractors should occur in the months ahead,” the brokerage said.

Analysts are also expecting at least RM4bil from the construction of the highway to go towards IJM Corp.

“IJM is vying for about RM4bil worth of works and KEuro will undertake the balance. IJM’s portion will mostly be subcontracted out. We believe that the subcontracting packages could be worth RM300mil to RM400mil each,” CIMB Research said.

From The Star