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(File pix) Affin Hwang Capital says YTL has the track record in undertaking the Express Rail Link (ERL) earlier and proposed the HSR project previously in 2006.

KUALA LUMPUR: The YTL Group-Tabung Haji (YTL-TH) consortium is a surprise pick as one of two project delivery partners (PDP) for the Kuala Lumpur-Singapore high speed rail’s (HSR) civil works in Malaysia, analysts said.

Affin Hwang Capital said while the selection of Malaysian Resources Corp Bhd-Gamuda Bhd consortium (for the northern portion) had been expected, the appointment of the YTL-THP tandem (for the sourthern portion) to share the PDP jobs came as a surprise.

“We gather that it was a close contest between MRCB-Gamuda and IJMSuncon-Jalinan Rejang-Maltimur Resources consortia for the northern portion (KL to border between Melaka and Johor) of the HSR PDP contract.

“The YTL-TH consortium win came as a surprise but we understand that YTL has the track record in undertaking the Express Rail Link (ERL) earlier and proposed the HSR project previously in 2006,” it said in a report.

Affin Hwang estimates the construction cost for the northern section is about RM15 billion to RM21 billion or 50 to 60 per cent of total project value, with PDP fees accounting for five to six per cent of it.

MIDF Research said using the Mass Rapid Transit Line 3 as a yardstick, PDP fees could range between five and six per cent of the civil works portion of the HSR.

This was estimated at RM30 billion to RM45 billion based on recent reports, although exact breakdown between northern and southern portion is not yet forthcoming.

The firm added that the value will depend on the robustness of work required for the northern portion versus southern portion, as underground works are typically a lot more expensive (up to five times) compared to onground works.

MIDF Research said YTL’s construction earnings were still depressed in the second quarter (Q2) 2018, but it expects gradual improvement in Q3 2018 before a step-up from Q4 2018 from commencement of key projects.

YTL is targeting orderbook to expand to RM12 billion by year end from the current RM400 million.

MIDF Research said key catalysts towards orderbook target include Gemas-Johor Bahru double tracking project with a total project value of RM8.9 billion and YTL Power’s RM11 billion 1,320 megawatt Tanjung Jati power plant, which entails an estimated construction value of RM4 billion.

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