CONSTRUCTION

SECTOR

08 March 2016

Penang undersea tunnel project kickoff in June

OVERWEIGHT

Sector report

(Maintained)

Mak Hoy Ken

mak-hoy-ken@ambankgroup.com
03-2036 2294

Rationale for report: Sector update

Published by
AmInvestment Bank Bhd (23742-V)
(A member of the AmBank Group)
15th Floor Bangunan AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Tel: ( 0 3 ) 2 0 7 0 - 2 4 4 4 ( r e s e a r c h )
Fax: (03)2078-3162

NST reported today that the Penang undersea tunnel and road initiatives would
commence in June.
The project involves a 7.2km-long undersea tunnel linking Penang Island to the
island states mainland. It will also involve 3 expressways.
The mega project will kick off with the construction of the three expressways,
starting with the Air Itam-Tun Dr. Lim Chong Eu Expressway bypass.
This would be followed by the Jln Tg.Bungah to Teluk Bahang paired-road when the
Air Itam-Tun Dr. Lim Chong Eu Expressway reaches the mid-point.
The construction of the third road from Gurney Drive to Tun Dr. Lim Chong Eu
will commence when the first two expressways are completed. The former will be
undertaken as a standalone project as more complex work needs to be carried out.
Meanwhile, we understand that the undersea tunnel will only commence either in
2020 or 2021.
Taken together, the three roads have a combined length of approximately 21km. The
budgeted amount is c.RM2bil, including RM500mil that will be reimbursed to the
Penang government for land acquisition cost.
Recall that Consortium Zenith BUCG Sdn Bhd (CZBUCG) had earlier been appointed
as main contractor for the RM6.3bil project under an award back in October 2013. In
exchange for the project, the Penang government is to compensate CZBUCG with
c.44.5 ha (~110 acres) of reclaimed land in Tg.Pinang.
CZBUCG is 98.1%-owned by Zenith Construction Sdn Bhd. The remaining
shareholders are Juteras Sdn Bhd (1.89%) and Beijing Urban Construction Group Co
Ltd (0.01%). The consortium will partner Beijing-based China Railway Construction
Corp Ltd for the undersea tunnel.
The commencement of the Penang Undersea Tunnel and road project augurs well
for infrastructure projects in Penang. More importantly, its approval will provide the
impetus for the overarching Penang Transport Master Plan (PTMP), for which the
Gamuda-led consortium had earlier been appointed as the Project Delivery Partner
(PDP).
While Gamuda is a clear winner should the PTMP project get the green light, we
envisage some sub-contracting opportunities for other Malaysian contractors once
all these mega Penang infrastructure initiatives take off the ground. Likewise, there
will be scope for suppliers of building materials, i.e. Lafarge Malaysia and Ann Joo
Resources to benefit.
The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in
this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell
or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd may from time to time have a position
in or with the securities mentioned herein. Members of the AmBank Group and their affiliates may provide services to any company
and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources
that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and
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for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgement as of
this date and are subject to change without notice.

Printed by
AmInvestment Bank Bhd (23742-V)
(A member of the AmBank Group)
15th Floor Bangunan AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Tel: ( 0 3 ) 2 0 7 0 - 2 4 4 4 ( r e s e a r c h )
Fax: (03)2078-3162

For AmInvestment Bank Bhd

Benny Chew
SR VP Equity Research

Construction Sector

08 March 2016

EXHIBIT 1: PROPOSED PENANG UNDERSEA TUNNEL AND ROAD PROJECTS

Source: The Star

AmInvestment Bank Bhd