Malaysia: KL118 Tower, a BOON for cement, steel & brick makers - analysts

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Updated Tue, 16 Dec 2014 10:57:21 GMT

THE RM6 billion KL118 Tower (Warisan Merdeka) project, which will take shape from end-2015, will keep cement, steel and brick makers busy for the next seven years.

This is on top of the contracts some have won for ongoing jobs, such as the Tun Razak Exchange (TRX), mass rapid transit (MRT) and light rail transit projects, analysts said.

Business Times reported yesterday that six groups have been shortlisted by Permodalan Nasional Bhd (PNB) to submit their bids for KL118 Tower, latest by January 28 next year.

They are UEM Group Bhd-Samsung, IJM Corp Bhd-Norwest Holdings Sdn Bhd- Shimizu Corp, Malaysian Resources Corp Bhd-China State Construction Engineering Corp, WCT Bhd-Arabtec Construction LLC, TSR Capital Bhd-Daewoo Group, and Seacera Group Bhd-Spaz Sdn Bhd-Sinohydro Corp-Shanghai Construction Group.

Project owner PNB will fund the KL118 Tower development, which will feature a 118-storey building and more than 400,000 square metres of residential, hotel and commercial space that will be linked to an MRT station.

Analysts said Tan Sri William Cheng’s Lion Industries Corp Bhd; Perwaja Holdings Bhd, a producer of semi-finished long steel products and direct reduced iron; and Kinsteel Bhd, a steel bar maker, would be the biggest beneficiaries of the development.

But they may have to compete with profitable steel makers CSC Steel Holdings Bhd and Southern Steel Bhd for a share in the development.

“It all depends on which group wins the engineering, procurement and construction contract for KL118 Tower. It will decide on the cement, brick or steel players it wants to work with,” said an analyst.

Topping the list of cement producers that may benefit from the project are YTL Cement Bhd, Lafarge Malaysia Bhd, Tasek Corp Bhd and Cement Industries of Malaysia Bhd.

Mercury Securities head of research Edmund Tham expects the construction, cement, steel and brick sectors to remain robust next year.

“There will be enough jobs for construction players and suppliers, especially with new launches coming up for TRX and the start of works for KL118 Tower. We are also expecting MRT Line 2 to commence next year,” he said.

Tham does not anticipate a shortage in the supply of building materials.

“There is sufficient supply. Overall, all these developments are good for the country. Ongoing projects are progressing smoothly.” - NST