Wednesday, August 05, 2020

KL-Singapore rail may cost 40m ringgit per km

Apr 06. 2018
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THE PROPOSED KL-Singapore High Speed Rail (HSR) could cost about 40 million ringgit per km which includes the systems and the track, according to an estimate by UOB Kay Hian Malaysia Research.

In its research note issued yesterday, it said that based on that estimate for the 350 km line, it would cost 15 billion.

The research house said that civil infrastructure could range from 35 billion to 40 billion ringgit while the 60 trains could cost 5 billion ringgit.

On Thursday, MyHSR Corporation Sdn Bhd (MyHSR Corp) completed its Project Delivery Partner (PDP) tender and has selected two consortia to assist with the project’s civil works. 

The Gamuda-Malaysian Resources Corporation consortium (Gamuda-MRCB) was picked for the northern portion of the alignment.

The Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd-TH Properties Sdn Bhd consortium (YTL-THP) was been selected for the southern portion of the alignment. The terms of the PDP package agreement shall be agreed upon within three weeks.

UOB Kay Hian Research said the Gamuda-MRCB was awarded the northern portion from Kuala Lumpur to the state border between Melaka and Johor. 

The contract will be awarded when MyHSR concludes negotiations with the consortia. Gamuda-MRCB would have a 50:50 interest in the PDP JV.

Construction of the HSR is expected to take five to six years. Assuming the 2026 timeline is intact, contracts for civil construction works should be awarded the latest by 2019. 

The respective governments would be financing the project that is within their borders. 

“In Malaysia’s case, we think the financing structure would be similar to that for the MRT Line 1 and Line 2, where bonds were raised via DanaInfra Nasional,” it said.

The research house said the official project cost has yet to be formally announced, given the sheer size and long timeframe. 

However, media reports suggest that the project could cost around RM60b, which comprises civil infrastructure works of 35 billion ringgit and the rest from train sets, operating systems and other associated costs.

Assuming the civil construction works are worth close to 40 billion ringgit (with the northern stretch accounting for slightly over half of the value), and PDP fees capped at 6 per cent of construction cost (similar to that for the MRT1, MRT2 and LRT3), the entire project would yield a net profit (at an estimated 5 per cent margin) of 2.1 billion to 2.4 billion ringgit. 

Assuming a 6.5-year construction period (early-19 to 2025), net profit from project management fees for the entire project would be about 300 million ringgit yearly on a straight line recognition basis.

“The HSR PDP contract could contribute about 8 per cent of Gamuda’s FY20F EPS and 37 per cent of MRCB’s 2020F EPS (we assume civil works package of 20 billion ringgit for the 50:50 consortium). 

“We would review our forecasts once details of the HSR contract are revealed. Our current forecasts assume 5 billion ringgit annual contract wins for Gamuda, and only 1.5 billion ringgit contract wins for MRCB.


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