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Rationale for report: Sector update
• Iskandar Investment Bhd (IIB) is poised to tender out RM250mil worth of infrastructure contracts in Iskandar Malaysia soon, said Business Times in a report today. Contracts are six packages – including jobs to build two schools, a stadium and college buildings.
• Located within Johor state, Iskandar Malaysia is one of Malaysia’s five Economic Growth Corridors. Expected to generate over RM382bil in investments and create over 1.4 million new jobs the entire corridor is to be developed over 20 years (i.e. 2006-2025) - covering 2,216 sq km.
• We gather that these contracts form part of RM2bil worth of projects that IIB is planning to dish out this year. Since its inception four years ago, IIB has awarded with over RM3bil worth of construction jobs.
• IIB is expected to tender out the contracts by month end - which has already moved past the earthwork phase. We understand that bulk of these works is within Nusajaya – one of the five flagship zones under Iskandar Malaysia.
• IIB is expected to ink an agreement to establish a world-class Maritime University in the area as well. It is also in talks with two other universities to set up engineering and hospitality schools in Edu City – a 120ha education enclave in Nusajaya.
• Apart from this, we understand that there has been more progress made on the RM750mil Legoland Malaysia. The Legoland theme park - located in Medini within the larger Nusajaya development - is one of the main attractions in Iskandar Malaysia.
• Earthworks are underway, while IIB has also awarded contracts to rides operators. Construction work is slated to start by 3Q this year ahead of its opening in 2012. In addition, there will also be a four-star business hotel and a resort hotel around Legoland. Meanwhile, basic infrastructure works at Medini is 24% completed.
• More importantly, we believe smaller-sized contractors would likely benefit more from the RM250mil worth of contracts at Iskandar Malaysia - to be dished out in six packages. We reckon that WCT Bhd (WCT) could be in the running for the larger Legoland Theme park jobs.
• WCT already has a foothold in Iskandar - group was awarded four contracts for infrastructure works worth RM766mil within Medini back in July 2009. We, nevertheless, maintain our HOLD rating on WCT with unchanged fair value of RM3.03/share - based on 10% discount to its Sum-Of-Parts value. This is to reflect deepening uncertainties surrounding potential additional provisions from the Bakun project - while incremental contract flows for WCT have largely been priced-in.
• Iskandar Investment Bhd (IIB) is poised to tender out RM250mil worth of infrastructure contracts in Iskandar Malaysia soon, said Business Times in a report today. Contracts are six packages – including jobs to build two schools, a stadium and college buildings.
• Located within Johor state, Iskandar Malaysia is one of Malaysia’s five Economic Growth Corridors. Expected to generate over RM382bil in investments and create over 1.4 million new jobs the entire corridor is to be developed over 20 years (i.e. 2006-2025) - covering 2,216 sq km.
• We gather that these contracts form part of RM2bil worth of projects that IIB is planning to dish out this year. Since its inception four years ago, IIB has awarded with over RM3bil worth of construction jobs.
• IIB is expected to tender out the contracts by month end - which has already moved past the earthwork phase. We understand that bulk of these works is within Nusajaya – one of the five flagship zones under Iskandar Malaysia.
• IIB is expected to ink an agreement to establish a world-class Maritime University in the area as well. It is also in talks with two other universities to set up engineering and hospitality schools in Edu City – a 120ha education enclave in Nusajaya.
• Apart from this, we understand that there has been more progress made on the RM750mil Legoland Malaysia. The Legoland theme park - located in Medini within the larger Nusajaya development - is one of the main attractions in Iskandar Malaysia.
• Earthworks are underway, while IIB has also awarded contracts to rides operators. Construction work is slated to start by 3Q this year ahead of its opening in 2012. In addition, there will also be a four-star business hotel and a resort hotel around Legoland. Meanwhile, basic infrastructure works at Medini is 24% completed.
• More importantly, we believe smaller-sized contractors would likely benefit more from the RM250mil worth of contracts at Iskandar Malaysia - to be dished out in six packages. We reckon that WCT Bhd (WCT) could be in the running for the larger Legoland Theme park jobs.
• WCT already has a foothold in Iskandar - group was awarded four contracts for infrastructure works worth RM766mil within Medini back in July 2009. We, nevertheless, maintain our HOLD rating on WCT with unchanged fair value of RM3.03/share - based on 10% discount to its Sum-Of-Parts value. This is to reflect deepening uncertainties surrounding potential additional provisions from the Bakun project - while incremental contract flows for WCT have largely been priced-in.
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