HSR project restart benefiting the construction and building materials industry.

(Kuala Lumpur, 19th News) The government will decide by the end of this year whether to restart the Long Xing high-speed rail project (HSR). Galaxy International Securities believes that once this project is confirmed, it will bring additional benefits to the construction and building materials industry.

Galaxy International Securities analysts pointed out that after the Requests for Information (RFI) and Requests for Proposal (RFI) procedures, there are now three shortlisted consortia remaining, and the government will decide before the end of this year whether to restart the Long Xing high-speed rail.

"We have noticed that China Railway Construction Corporation participated in the bidding alone without a local partner. Some media reports have indicated that the government's policy requires strategic national assets such as the KL-Singapore high-speed rail to be held by a consortium with at least 51% ownership by Malaysian companies."

However, the analyst does not rule out the possibility that the three shortlisted consortiums may engage in some form of cooperation behind the scenes to present a more comprehensive bidding plan.

"In our view, local consortiums may eventually collaborate with China Railway Construction Corporation, as the latter can provide the train carriages and systems required for the high-speed rail, as well as more importantly, financing."

Analysts believe that the government does not seem willing to provide any form of funding for the KL-Singapore high-speed rail, even though the bidding consortiums have requested financial assistance.

In addition, analysts said that the success of the Malaysia-Singapore high-speed rail will depend on whether Singapore is willing to participate, which has not yet happened.

“In any case, Singaporean Prime Minister Heng Swee Keat mentioned during his visit to Malaysia in June that the country has an open attitude towards the resumption of the Malaysia-Singapore high-speed rail.”

Although there are still many key unanswered questions regarding the Malaysia-Singapore high-speed rail project, such as structure, potential costs, etc., the analyst believes that if the project is eventually implemented, it can bring additional bullish effects to the construction and building materials sector.

In addition, the analyst also maintains a “shareholding” rating for the construction and building materials sector.