KUALA LUMPUR (March 16): Bursa Malaysia’s Construction Index rose on Wednesday’s (March 16) trading session, after details of the Mass Rapid 3 (MRT3) Circle Line project was revealed the day before.

At the closing bell, the construction index was 4.99% or 7.36 points higher at 154.77, the highest since its 155.31 points on Jan 7, 2022.

Gamuda Bhd was among top gainers on Bursa, closing at 24 sen or 7.74% higher at RM3.34. The closing price is the highest since May 11, 2021, when it was trading at RM3.58. Gamuda saw some 13.12 million shares exchanging hands, with a market capitalisation of RM8.53 billion. Year-to-date, the counter has risen 16.38% from RM2.87.

Meanwhile, newly-listed Siab Holdings Bhd saw its share price rise one sen or 5.26% to 20 sen, for a market value of RM97.93 million. It was the 14th top active stock on the local bourse.

Other construction stocks include IJM Corp Bhd, which closed up 10 sen or 6.76% at RM1.58, translating into a market capitalisation of RM5.76 billion; while JAKS Resources Bhd went up 3.33% to 31 sen with a market value of RM633.12 million.

The Mass Rapid Transit 3 (MRT3) Circle Line project is estimated to cost around RM31 billion and will be fully operational by 2030. The tender for construction works will be opened in May through an open tender process and expected to be awarded in the fourth quarter this year.

The project consists of five main packages comprising two turnkey contractors for elevated works, one turnkey contractor for underground works, one for integrated rail systems and one project management consultant to work alongside MRT Corp as the project developer.

While the distinctive private funding initiative (PFI) for each main package and its implementation have yet to be announced, Public Invest Research views the proposed model to be reasonable.

This allows the government flexibility in managing its financial constraint as contractors are expected to contribute the upfront construction cost, said the research house.

“Meanwhile, since the project is split into five main packages, the responsibility of the upfront construction cost, as well as the execution risks are to be shared by all parties involved. Assuming a 30% upfront cost, the amount to be contributed and shared will be RM9.3 billion.

“Unlike the PDP [Project Delivery Partner] and a turnkey contract model implemented in MRT1 and 2 (in this case just MMC-Gamuda), the use of PFI structure would stretch the burden solely to just one contractor,” Public Invest said in a note on Wednesday.

MMC and Gamuda, through their joint venture, MMC-Gamuda Joint Venture Sdn Bhd is a prime beneficiary for the underground package given its track record as the contractor for the tunnelling works for MRT1 and 2 projects, noted Public Invest.

“Assuming the same pricing per km from the MRT2, MRT3’s underground package could cost around RM10.7 billion.

“Unlike in MRT 1 and 2 where the elevated works were broken down into many contracts, MRT 3 will only have 2 packages. Given the implementation of PFI structure in this MRT3 project, contractors with a healthy balance sheet will have an added advantage,” it added.