09 June 2014

YTL, Gamuda benefiting from KL-Singapore rail link - CIMB Research

  09 June 2014
KUALA LUMPUR: CIMB Equities Research expects YTL Corp and Gamuda to benefit from the Kuala Lumpur-Singapore high speed rail (HSR) project.

It said on Monday the Land Public Transport Commission's (SPAD) updates on the status of the HSR project highlighted that the targeted start of works was end-2015.

"We are positively surprised on the conviction, as the project has yet to complete its feasibility studies. Nevertheless, it is overall encouraging that the government remains committed in this high-impact project over the longer-run.

"We believe YTL Corp could be the main beneficiary if the award takes on a private-public partnership (PPP) and private finance initiative (PFI) (versus a full government financing ) given its balance sheet," it said.

CIMB Research added if the HSR takes off next year, it is a double bonus for the sector as MRT 2 should start too. Gamuda remains our top pick; the biggest beneficiary of the MRT, it added.

The research house added the time frame was "doable" if the RM30bil to RM40bil HSR takes on a PFI/PPP-type structure, as the additional government-type funding of over RM50bil will be focused on the remaining two MRT lines.

"We believe YTL Corp could leverage on a PFI/PPP-scheme given its strong balance sheet. For the tender phase, likely to begin in early 2015 based on SPAD's schedule, we would not discount other potential domestic competitors such as Gamuda as the group had previously said that it was keen to bid on the HSR too," it said.-- The Star
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