Approval for MRT3 a positive for builders
RHB Research said the key beneficiaries of MRT3 can be divided into the first-liners (main contractors) and second-liners (subcontractors).
'Based on the track records in the previous MRT1 and MRT2 projects – contractors such as Gamuda Bhd , Sunway Construction Group Bhd , IJM Corp Bhd , Malaysian Resources Corp Bhd (MRCB), WCT Holdings Bhd , Gadang Holdings Bhd and Mudajaya Corp are expected to be the first-liners.
'Meanwhile, builders such as Econpile Holdings Bhd , Gabungan AQRS Bhd , Kimlun Corp Bhd and TRC Synergy Bhd could play a role as subcontractors for the MRT3 project,' the research house said in a report recently.
Last week, Transport Minister Anthony Loke formally signed off on the MRT3 project following a public-inspection exercise conducted between September and December last year.
After the approval of the final railway scheme for MRT3, the land acquisition process begins and is expected to be completed by end-2026.
The public inspection exercise held last year saw Malaysia Rapid Transit Corp (MRT Corp) receive over 45,000 written feedback submissions.
According to MRT Corp, an overwhelming 93.3% of the feedback expressed support for the project, reflecting strong public and stakeholder endorsement
Following the feedback received, several improvements were made to the placement of stations and viaducts along the project's alignment, as well as the design of the MRT3 Circle Line's rail system by MRT Corp.
Thirty two stations were planned for MRT3 – 22 elevated, seven underground, and three provisional ones with an alignment spanning 51km (39km elevated, 12km underground), during the public inspection exercise last year.
It was also highlighted by MRT Corp that land acquisitions have been reduced from 1,012 to 690 lots, and improvements were made to station and viaduct placements along the alignment.
'We envisage some details on MRT3 being announced during the upcoming tabling of either the 13th Malaysia Plan on July 31 or Budget 2026 on Oct 10, perhaps regarding the funding mechanism, latest estimated cost, and also if a fresh round of re-tendering is required.
'In the revised Budget 2023 tabled in February 2023, the government announced an intention to review the cost of the MRT3 project in the hopes of reducing the total amount to below RM45bil from the estimated RM68bil in 2018,' RHB Research said.
RHB Research's top picks with regards to the project include Gamuda, Sunway Construction, and Binastra Corp Bhd with a target price of RM5.86, RM6.80 and RM2.64, respectively.
MBSB Research said it expects a re-tender exercise to be called by mid-2026, and contracts to be awarded towards the end of the land acquisition exercise, which will likely be between end-2026 and mid-2027.
'MRT Corp had previously sought four extensions for the tender validity of MRT3. No extensions were sought after the fourth extension ended in March 2024, which would mean that the tenders have naturally lapsed.
'We believe there would also be some changes to the original alignment of the project and the placement of stations, considering the reduction in plots of land for acquisition,' the research firm said.
MBSB Research stated while the approval of the final railway scheme was slightly behind the initial schedule, where it was expected to be approved by the fourth quarter of financial year 2024 (4Q24), nevertheless, it is still 'a positive' as this marks 'a step forward for the mega rail project'.
'MRT Corp expects the land acquisition process to be completed by the end of next year, which will then pave the way for construction to begin.
'We also do not discount the possibility that the land acquisition process may take slightly longer than expected. Notices for landowners to vacate acquired land should be issued starting 1Q26, where they will be given up to six months to vacate,' the research house said.
MBSB Research maintained 'positive' on the construction sector following the latest developments.
The research house expects Gamuda, which has a 'buy' call with a target price of RM5.42, and its joint venture partner MMC Corp Bhd to be the front-runner for the largest MRT3 package when the retender exercise is called, premised on their large degree of experience with MRT1 and MRT2.
'Other potential contenders for the two smaller packages are YTL Corp Bhd with a 'buy' call target price of RM2.84, IJM Corp with a 'buy' call and target price of RM3.74, MRCB with a 'buy' call and target price of 56 sen, and Sunway Construction with a 'buy' call and a target price of RM6.44.
'We also expect Malayan Cement Bhd , with a 'buy' call and target price of RM7.49, to be a direct beneficiary of the project,' MBSB Research said.
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