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CONSTRUCTION

SECTOR

22 Mar 2016

CRC to set up regional HQ at Bandar Malaysia

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

The Associated Press (AP) reported that China Railway Group Ltd (CRC) is planning
to set up a new regional centre in Bandar Malaysia. This new facility is expected to
cost ~$2bil. It is to house CRCs consolidated regional businesses and operations.
The latest plans by CRC comes after the China Railway Engineering Corp-Iskandar
Waterfront JV had announced in January its intention to acquire a 60% stake in the
Bandar Malaysia project from 1MDB for ~RM7.4bil.
Bandar Malaysia is being positioned to serve as an important gateway to the Klang
Valley under the proposed KL to Singapore High Speed Rail (HSR).
It is also supposed to have links to the Kuala Lumpur International Airport and
Changi Airport, and the proposed Pan ASEAN Rail Transit to Bangkok.
CRCs latest moves could provide the group with a leg up in the race for the highlycoveted KL-Singapore High Speed Rail (KL HSR) project. Per the AP report, CRC
said it is awaiting tenders to be called by both the Malaysian and Singaporean
governments.
Last November, it was reported that 98 submissions were received following a
Request for Information (RFI) exercise that was called for this project with
European companies/consortia dominated this list. There were also 14 submissions
received from East Asian firms, and another 13 from Malaysian outfits.
CRC is making its presence felt in the region. Apart from the KL Singapore HSR, the
infrastructure giant recently secured a $5.5bil mandate to build Indonesias first high
speed rail line.
More importantly, CRCs reported interest in the KL HSR continues the rising
momentum of Chinese FDIs into Malaysia. To be sure, FDIs from China and Hong
Kong into Malaysia rose by a compounded annual growth rate of c.22% over the
past seven years, according to the Nikkei Asian Review.
The rising weight of Chinese FDIs and investments could provide legitimacy and a
th
strong foundation to help fund some of the upcoming 11 Malaysia Plan (11MP)
projects, the KL HSR notwithstanding.
That said, we believe it is too premature to gauge the potential winners from the KL
HSR project until more details on the tenders are revealed. Regardless of the
winners, this could provide multi-year spinoffs for local suppliers of building
materials and products, i.e. Lafarge Malaysia, Ann Joo Resources, IJM Corp (ICP)
and KimLun Corp (tunnel lining, segmental box girdles).
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
reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted
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

22 Mar 2016

EXHIBIT 1: PROPOSED KL-SINGAPORE HIGH SPEED RAIL

Source: NST

AmInvestment Bank Bhd

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