The HSR project is expected to benefit from the restart of the construction materials industry
The restart of the Longxin High Speed Rail is expected to reap dividends for the construction materials industry
(KUALA LUMPUR, 19th) The government will decide at the end of this year whether to restart the Longxin High Speed Rail Project (HSR), and Galaxy International Securities believes that once implemented, it will bring additional dividends to the construction and building materials industry.
Analysts at Galaxy International Securities pointed out that after going through the two processes of Information Request (RFI) and Financial Plan Request (RFI), there are now 3 finalist consortiums, and the government will decide whether to restart the Longxin High Speed Rail before the end of this year.
Although the government did not disclose the shortlist, the analyst quoted local media as saying that the finalists were $YTL(4677.MY$ Yang Zhongli Agency - SIPP Railway Foundation; $MRCB(1651.MY$ Horse Resources - $IJM(3336.MY$ IJM Berjaya Rail (Berjaya Rail) - Malaysia Railways (KTMB) joint consortium; and $CHINA RAIL CONS(01186.HK$ A Chinese consortium led by China Railway Construction (CRCC).
It is expected to join forces with China Railway Construction
“We noticed that China Railway Construction participated in the bidding alone without a local partner. According to media reports, the government's policy is that national strategic assets such as the Longxin High Speed Rail must be owned by Malaysian companies holding at least 51% of the shares.”
However, the analyst did not rule out that the three finalist consortiums may cooperate to some extent behind the scenes to come up with a more comprehensive bid plan.
“In our opinion, the local consortium may eventually join forces with China Railway Construction, as the latter can supply the cars and systems needed for high-speed rail, as well as more important financing.”
Analysts believe that the government seems unwilling to provide any form of funding for the Longxin High Speed Rail, even though the consortium participating in the bid has already requested financial aid.
Singapore's attitude is key
Furthermore, analysts said that whether the Longxin High Speed Rail can be successfully carried out will depend on whether Singapore is willing to participate, and this has not happened yet.
“In any case, during his visit to Malaysia in June, Singapore Prime Minister Huang Xuncai mentioned that the country is open to restarting the Longxin High Speed Rail.”
Although many key questions about the Longxin High Speed Rail remain unanswered, such as structure and potential costs, the analyst believes that if the project is finally implemented, it can bring additional benefits to the construction and building materials sector.
Among them, analysts believe that the top 3 winners who can benefit the most from the Longxin High Speed Rail are Yang Zhongli's agency, $MCEMENT(3794.MY$ Malaya ash and $ECONBHD(5253.MY$ Yigang Holdings.
Furthermore, the analyst also maintained an “gain” rating in the construction and building materials sector.
Source: Nanyang Siang Pao
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