You are on page 1of 18

May 7, 2012

IMPORTANT DISCLOSURES. INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Designed by Eight, Powered by EFA


REGI ONAL
MALAYSIA
SINGAPORE
INDONESIA
THAILAND
PHILIPPINES
CHINA, HONG KONG

CONSTRUCTION
SHORT TERM (3 MTH) LONG TERM




Conviction


More miles to go for rail and
highway jobs
The local construction scene remains buoyant as a slew of rail and
highway projects are set to be awarded in the medium term. A couple
of other projects could also come onstream if they pass feasibility tests
and if political factors are favourable.

Figure 1: Major transport infra jobs
Projects Total cost/est. Status
MRT SBK line RM20bn Awards in progress
MRT 2 (circle line) & MRT 3 c.RM40bn Detailed feasibility study in 2H12
West Coast Expressway (WCE) RM7.1bn Pending signing of CA
Suke - highway RM1.6-2.4bn Under study
Dash - highway RM1-1.6bn Under study
Kidex- highway RM2.2bn Under study
High Speed Rail (KL-S'pore) RM30bn Detailed feasibility study in 2H12

SOURCES: CIMB, COMPANY REPORTS

Job awards will continue to be led by
the MRT SBK line packages. We
expect newsflow to be good in 2H12.
This continues to anchor our Trading
Buy stance on the sector, which is not
an Overweight because of political
risk. Gamuda and IJM Corp are still
our top picks.
Transport infrastructure goes
beyond KVMRT
In this report, we focus on the outlook
for large-scale rail and highway
projects and show that traffic
alleviation/dispersal initiatives under
the 10MP and ETP go beyond the
KVMRT. Working on either the cost
quoted in the press or the benchmark
cost/km, we estimate the highway
and rail jobs to be worth c.RM95bn in
total. The rollout of job awards will
focus on the MRT SBK line over the
next few months.
Our checks indicate that three urban
highways – Sg. Besi-Ulu Kelang
Expressway (Suke), Damansara-Shah
Alam Highway (Dash) and
Kinrara-Damansara Expressway
(Kidex) – are already at the planning
stage.
Indications of timing
Feasibility studies for MRT 2 & 3 and
the high speed rail (HSR) will be in
full swing in 2H12 and decisions are
likely by year-end. MRT Corp will
award the remaining elevated
packages for the SBK line by early
3Q12. Driven by the MRT, job awards
in 2012 could total RM20bn-25bn
compared to RM8.7bn in 2010 and
RM8.1bn last year. Of the total
RM13.2bn awards YTD, 81% or
RM10.7bn was for rail-related works.
Potential winners
Potential winners of the remaining
packages of the elevated portion of
the MRT SBK line are the 28
prequalifiers, 13 of which are listed
contractors. Among the 13, we gather
that TRC Synergy, Mudajaya, Sunway,
Fajarbaru, Gadang, WCT and Loh &
Loh stand a good chance of bagging
the viaduct and station packages. Key
winners of the WCE remain IJM Corp
and KEuro. For Kidex, Bina Puri and
Mudajaya were reportedly among the
contenders. We continue to believe
that the MMC-Gamuda JV has a good
chance of emerging as the main
winner of MRT 2 & 3.



Notes from the Field







Sharizan Rosely

T (60) 3 20849864
E sharizan.rosely@cimb.com





“The PDP will speed up
the award of the
remaining elevated
packages of MRT SBK line
from Oct-12 to early
3Q12.”

─ A source in PDP


Sources: CIMB. COMPANY REPORTS
Highlighted Companies
IJM Corp
IJM Corp is among the main beneficiaries of
large-scale projects including the RM7.1bn West
Coast Expressway (WCE), RM1bn extension of
New Pantai Expressway (NPE) and KVMRT. It could
still win another MRT elevated package.
Gamuda
The group is the winner of the RM8.3bn
underground works for MRT SBK line and the
frontrunner for the RM8bn Gemas-JB double
tracking project. It could be one of the beneficiaries
of the HSR given its rail expertise.
Mudajaya
Mudajaya has access capacity to undertake large
scale highway jobs. The group is vying for two
subcontract packages from WCE, and was
reportedly one of the frontrunners of another urban
elevated highway worth RM2.2bn.


CONSTRUCTION

May 7, 2012




2


KEY CHARTS

Major incoming Klang Valley jobs to focus
on transport infra – highways and rail
We estimate that RM95bn worth of highway and rail jobs
could come onstream from this year onwards and buoy
construction activities. The rollout of job awards will
focus on the MRT SBK line over the next few months. In
the short term, at least three more packages (v1, v4 and
v7) of the SBK line, each worth an estimated
RM800m-1bn, will be awarded.


Projects Total cost/est. Status
MRT SBK line RM20bn Awards in progress
MRT 2 (circle line) & MRT 3 c.RM40bn Detailed feasibility study in 2H12
West Coast Expressway (WCE) RM7.1bn Pending signing of CA
Suke - highway RM1.6-2.4bn Under study
Dash - highway RM1-1.6bn Under study
Kidex- highway RM2.2bn Under study
High Speed Rail (KL-S'pore) RM30bn Detailed feasibility study in 2H12



RM20bn-25bn contracts could be awarded
this year
We expect the total value of local job awards in 2H12 to
be double the RM13.2bn achieved in 1H12. Driven by the
MRT, job awards in 2012 could total RM20bn-25bn
compared to RM8.7bn in 2010 and RM8.1bn last year.
Of the total RM13.2bn awards YTD, 81% or RM10.7bn
was for rail-related works.

8,650
8,100
13,154
25,000
0
5,000
10,000
15,000
20,000
25,000
30,000
2010 2011 1H12 2012E
RM m



Identifying the potential winners
28 companies have prequalified for the remaining
packages of the elevated portion of the MRT SBK line.
Among the 13 that are listed companies, TRC Synergy,
Mudajaya, Sunway, Fajarbaru, Gadang, WCT and Loh &
Loh stand a good chance of bagging the viaduct and
station packages. Key winners of the WCE remain IJM
Corp and Keuro. Recent press reports on Kidex indicated
that Bina Puri and Mudajaya are among the likely
winners. The MMC-Gamuda JV has a good chance of
emerging as the main winner of MRT 2 & 3.

Projects Potential winners
MRT SBK line : 13 listed contractors - see chart
MRT 2 (circle line) & MRT 3 : MMC-Gamuda has a good chance
West Coast Expressway (WCE) : IJM Corp, KEuro, WCT, Mudajaya
Suke - highway : Various/unknown
Dash - highway : Various/unknown
Kidex - highway : Mudajaya, Bina Puri
High Speed Rail (KL-S'pore) : YTL Corp (the original proposer)



Order book and potential top-ups
Contractors under our coverage are looking at
RM1bn-4bn worth of new contracts by end-2012. Their
current outstanding order books of RM2bn-6bn should
last for at least two years.

5,800
3,500
2,200
2,500
4,000
2,840
3,100
1,000
4,000
1,000
1,000
1,500
1,000
1,500
0
1,500
3,000
4,500
6,000
7,500
9,000
Gamuda IJM Corp MRCB Muhibbah Mudajaya Sunway WCT
Outstanding order book YTD (RM m) Potential replenishment by end 2012 (RM m)


SOURCE: CIMB, COMPANY REPORTS


CONSTRUCTION

May 7, 2012




3






Figure 2: Sector Comparisons
Price Target Price
(local curr) (local curr) CY2011 CY2012 CY2011 CY2012 CY2011 CY2012 CY2013 CY2011 CY2012 CY2011 CY2012
Gamuda GAM MK Trading Buy 3.61 4.55 2,465 15.4 12.8 23.7% 3.85 3.62 24.8% 29.2% 30.2% 21.3 15.7 3.1% 3.2%
IJM Corp Bhd IJM MK Trading Buy 5.58 6.55 2,535 18.3 14.6 29.4% 3.08 2.90 17.1% 20.5% 21.4% 12.7 10.5 2.0% 2.1%
Malaysian Resources Corp MRC MK Trading Buy 1.74 2.40 793 30.9 26.9 19.4% 2.80 2.54 9.8% 9.7% 11.1% 19.5 11.8 1.1% 1.4%
MTD ACPI Engineering ACP MK Underperform 0.36 0.44 27 na na na 0.49 0.53 -9.6% -6.3% -6.2% 76.1 16.4 1.9% 1.9%
Muhibbah Engineering MUHI MK Trading Buy 1.27 1.60 170 8.3 7.2 37.7% 0.84 0.82 10.1% 11.5% 12.6% 7.1 7.0 3.9% 3.9%
Mudajaya Group MDJ MK Trading Buy 2.80 3.45 506 6.6 5.7 16.6% 1.62 1.28 28.7% 24.5% 23.8% 3.5 2.5 2.9% 3.0%
Sunway Bhd SWB MK Neutral 2.31 2.65 982 8.1 8.4 -14.8% 1.07 0.87 14.1% 11.2% 10.8% 13.9 7.3 0.0% 3.9%
WCT Bhd WCT MK Trading Buy 2.46 3.00 664 12.0 11.1 13.9% 1.42 1.29 12.7% 12.1% 13.3% 13.6 8.7 4.0% 4.0%
Malaysia average 17.7 14.4 26.8% 2.99 2.82 17.1% 20.1% 21.2% 15.2 11.9 2.4% 2.5%
Adhi Karya ADHI IJ Outperform 1,060 1,100 207 10.5 9.9 13.4% 1.94 1.68 19.6% 18.3% 21.6% 4.0 3.3 2.3% 2.2%
Pembangunan Perumahan PTPP IJ Outperform 760.0 760.0 399 15.3 14.5 21.8% 2.58 2.29 18.4% 16.4% 20.6% 6.2 6.3 1.6% 1.7%
Total Bangun Persada TOTL IJ Outperform 570.0 675.0 211 15.6 11.5 31.7% 3.07 2.67 20.4% 24.8% 22.0% 7.5 5.7 2.2% 3.3%
Wijaya Karya WIKA IJ Outperform 1,100 1,200 720 18.7 15.0 24.7% 3.20 2.76 15.5% 16.6% 17.8% 11.6 11.0 0.9% 1.4%
Indonesia average 15.6 13.3 22.0% 2.78 2.42 17.6% 17.9% 19.8% 7.2 6.6 1.4% 1.8%
CH. Karnchang CK TB Underperform 7.75 7.00 414 na na na 2.01 2.05 -54.3% -2.1% 4.7% na 100.7 1.2% 0.0%
Italian-Thai Development ITD TB Underperform 3.60 3.06 488 na 118.2 5.1% 1.87 1.84 -15.3% 1.5% 4.9% 17.8 11.5 0.0% 0.0%
Sino-Thai Eng & Construction STEC TB Outperform 13.60 18.50 522 17.9 16.8 36.8% 2.86 2.69 18.5% 16.3% 17.5% 12.6 10.3 1.5% 3.3%
Thailand average na 46.5 55.9% 2.19 2.15 -18.7% 4.6% 8.7% 26.8 14.7 0.9% 1.2%
Yongnam Holdings YNH SP Outperform 0.26 0.33 259 5.0 4.8 11.3% 1.10 0.91 24.8% 20.3% 18.2% 3.9 4.0 3.9% 2.4%
Singapore average 5.0 4.8 11.3% 1.10 0.91 24.8% 20.3% 18.2% 3.9 4.0 3.9% 2.4%
Average (all) 19.7 13.4 14.4% 2.28 2.03 11.8% 15.7% 16.8% 13.4 9.9 2.0% 2.5%
EV/EBITDA (x) Dividend Yield (%) Core P/E (x) 3-year EPS
CAGR (%)
P/BV (x) Recurring ROE (%)
Company
Bloomberg
Ticker
Recom.
Market Cap
(US$ m)

SOURCES: CIMB, COMPANY REPORTS
Calculations are performed using EFA™ Monthly Interpolated Annualisation and Aggregation algorithms to December year ends
CONSTRUCTION

May 7, 2012




4


More miles to go for rail and
highway jobs
1. BACKGROUND
1.1 Transport infrastructure does not end with KVMRT
In this piece, we focus on the outlook for large-scale rail and highway projects in
2012 and beyond and show how traffic alleviation initiatives under the 10
th

Malaysia Plan (1oMP) and Economic Transformation Programme (ETP) go
beyond the Klang Valley MRT (KVMRT). Interconnectivity of other developing
urban areas beyond the reach of the MRT lines will be supported by the building
of urban highways, most of which will be largely elevated and will compensate
for the congestion of existing highway networks.
For KVMRT, the 52km MRT Sg. Buloh-Kajang (SBK) line is just the beginning
as MRT Co. is planning to start feasibility studies on MRT 2 and 3 in 2H12.
Based on the earlier proposal for the MRT, the remaining two lines will be
double the length of the SBK line. The detailed proposal and alignment of MRT
2 (circle line) and MRT 3 (radial line) is scheduled to be ready at end-12. This
suggests that over the next 5-10 years, construction activities will be driven by
transport infrastructure works.
1.2 Implementation of highway projects under 10MP
The 10MP has outlined seven new highways to be built over the next 4-5 years.
The rollout of these highways kicked off with the approval of the West Coast
Expressway (WCE) in early Jan 12. Despite much controversy, we believe that it
is just a matter of time before the concession agreement (CA) is finalised, ideally
before the upcoming general elections. Other highways will be much shorter
than WCE’s 316km but the cost/km is estimated to be higher given the almost
fully elevated structures. The new highways will traverse highly populated areas
(brown field) compared to WCE’s alignment through the west coast of Selangor
which is less populated.

2. OUTLOOK
2.1 Three urban highways at the planning stage
Our checks indicated that three urban highways are already at the planning
stage. They are the Sg. Besi-Ulu Kelang Expressway (Suke), Damansara-Shah
Alam Highway (Dash) and Kinrara-Damansara Expressway (Kidex). These
highways are among the seven planned for development under the 10MP. The
total value of the seven highways is estimated to be RM19bn. They are targeted
to be completed within the next five years, i.e. by 2017. Suke and Dash will be
owned and managed by Project Lintasan Kota Holdings Sdn Bhd (Prolintas),
which currently operates and manages the Ampang-Kuala Lumpur Elevated
Highway, Guthrie Corridor Expressway and Lebuhraya Kemuning Shah Alam.
2.2 Suke
Suke is a 31.8km, three-lane, dual carriageway expressway that will start at Sri
Petaling and pass through Sungai Besi, Alam Damai, Cheras-Kajang, Taman
Bukit Permai, Taman Putra, Taman Permai Jaya, Taman Dagang Permai,
Taman Kosas, Ampang dan Taman Hillview before ending at Ulu Kelang.
CONSTRUCTION

May 7, 2012




5

Figure 3: Details of Suke
Designation : Sungai Besi-Ulu Kelang Elevated Expressway (SUKE)
Length : 31.8km, 3 lane, dual carriageway (fully elevated)
Total cost : Unknown
Total cost/km : Unknown
Total toll stops : 3 toll plazas,11 interchanges
Total land to be acquired : Unknown
Construction period : 4-5 years
Concession period : Unknown
Concession owner : Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) - 100%-owned by PNB
Coverage area : Alternative route for MRRII, linking major highways in Eastern Klang Valley

SOURCES: CIMB, COMPANY REPORTS

Figure 4: Suke’s alignment

SOURCES: PROLINTAS WEBSITE

2.3 Dash
Dash is a 20.1km, three-lane, dual carriageway expressway that will commence
at the Puncak Perdana U10 Shah Alam intersection and serve as a link for
Puncak Perdana, Alam Suria, Denai Alam, Kampung Melayu Subang, Jalan
Sungai Buloh, the Rubber Research Institute of Malaysia, Kota Damansara,
Damansara Perdana and Mutiara Damansara. The expressway ends at the
Penchala interchange.
Figure 5: Details of Dash
Designation : Damansara-Shah Alam Highway (DASH)
Length : 20.1km, 3 lane, dual carriageway (fully elevated)
Total cost : Unknown
Total cost/km : Unknown
Total toll stops : 3 toll plazas,12 interchanges
Total land to be acquired : Unknown
Construction period : 4-5 years
Concession period : Unknown
Concession owner : Projek Lintasan Kota Holdings Sdn Bhd (Prolintas) - 100%-owned by PNB
Coverage area : Link between east and west of Klang Valley: Shah Alam to Damansara Perdana

SOURCES: CIMB, COMPANY REPORTS

CONSTRUCTION

May 7, 2012




6


Figure 6: Dash’s alignment

SOURCES: PROLINTAS WEBSITE

2.4 Kidex
Kinrara-Damansara Expressway (Kidex) will link Kinrara in Puchong and Pusat
Bandar Damansara. The main purpose of this fully elevated, 50km highway is to
divert the heavy traffic on the Lebuhraya Damansara Puchong (LDP).
Figure 7: Details of Kidex
Designation : Kinrara-Damansara Expressway (KIDEX)
Length : 50km, 3 lane, dual carriageway (fully elevated)
Total cost : RM2.2bn
Total cost/km : RM44m
Total toll stops : 3 toll plazas,11 interchanges
Total land to be acquired : Unknown
Construction period : 4-5 years
Concession period : Unknown
Concession owner : Unknown
Coverage area : Kinrara-Damansara

SOURCES: CIMB, COMPANY REPORTS
CONSTRUCTION

May 7, 2012




7

Figure 8: Kidex’s alignment

SOURCES: CIMB, MALAYSIA TODAY

2.5 Feasibility study of MRT 2 & 3 to start in May 12
On the rail side, MRT Corp has targeted the feasibility study of MRT 2 & 3 to
commence this month. Review of the alignment will take six months and the
proposal is slated to be ready by end-2012. The focus will be on MRT 2 as it is
circle line that will connect high-density areas and link the MRT line with the
existing monorail and LRT networks. MRT 3 will be a radial line spanning the
northwest to southwest of Klang Valley and connecting Kepong, Selayang and
Klang.
Figure 9: MRT 2 & 3
Lines Type Distance Coverage
MRT 2 Circle line na City centre - connection to other rail networks, largely underground
MRT 3 Radial line na Northwest-southwest of Klang Valley - Kepong, Selayang, Klang

SOURCES: CIMB, COMPANY REPORTS

2.6 Detailed feasibility study of HSR
It is encouraging that the high-speed rail (HSR) project is still under
consideration as it would boost construction activity. The HSR project
connecting Kuala Lumpur to Singapore could cost as much as RM30bn, as
recently reported. It would take 1½ years to design and 3-4 years to construct.
CONSTRUCTION

May 7, 2012




8

However, several feasibility issues need to be addressed and finalised by end-12
before the government makes a decision. We also gather that the HSR is likely
to be implemented as a privately-funded project with no government subsidies
and a target of 8m passengers p.a. for the project to be viable.
Figure 10: Details of HSR
Project type : Likely privately led with no government subsidy
Cost : RM30bn
Coverage : KL-JB-Singapore
Distance : 320km
Completion of feasibility studies : End 2012 or 1Q2013
Development period : 1.5 years - design, 3-4 years - construction
Viable passengers p.a. for HSR : 8m
Passenger catchment : >2m airline travellers p.a., 2m cars and bus users p.a.

SOURCES: CIMB, EDGE WEEKLY

2.7 Balance of works for LRT extension
Syarikat Prasarana Negara (Prasarana) has targeted to disburse in two months’
time the remaining four work packages worth RM2.5bn for the Ampang light
rail transit (LRT) extension. The four packages are for the supply of the LRT
trains, construction of Station 12, supply and management of the access card
and the engineering, procurement and construction contract (EPCC). The latest
package worth RM300m was awarded to Fajarbaru Builder. Scope of works
include depot and traction substation for Ampang LRT extension.

3. ESTIMATION OF COST
3.1 New highways will be fully elevated, double the value of
non-urban highways
Based on our checks with various contractors, the cost/km for fully elevated
urban highways ranged from RM50m to RM80m over the past five years but
has risen to around RM80-100m. It should rise by 10-15% over the next five
years. The cost/km was RM8m for PLUS Expressway’s 772km North South
Expressway (NSE) which was built in 1987-94, largely on flat land. The cost/km
for the next mega highway i.e. the WCE, which will be built over the next five
years, is RM22.1m (including land acquisition cost) or 185% higher than NSE’s.
By comparison, the cost of fully elevated highways at current material prices is
easily double the value of non-urban highways on a cost/km basis.
Figure 11: Comparison between WCE and NSE
Details WCE NSE
Designation : West Coast Expressway (WCE) North South Expressway (NSE)
Length : 316km - 224km tolled, 92km toll-free (original length: 275.5km) 772km
Project type : Built-operate-transfer (BOT) Built-operate-transfer (BOT)
Total cost : RM7.1bn (original cost: RM3.1bn) RM6bn
Total cost/km : RM22.3m (original cost/km: RM11.3m) RM7.8m
Total toll stops : 16 (9 in Selangor, 7 in Perak)
Total land to be acquired : 1,601.7 acres (77.8 acres state land, 1,523.9 acres private land) na
: Total cost of RM980m to be borne by the gov't na
Construction period : 5-6 years 7 years (1988-94)
Concession period : 60 years (33 years as previously reported) 50 years
Initial/start-up funding : RM2.2bn Gov't support loan (GSL) of RM2.2bn @ 4% p.a. na
: Interest subsidy up to 3% on commercial loans for 22 years
Concession owner : West Coast Expressway Sdn Bhd Project Lebuhraya Utara Selatan (PLUS)
Major concession owner : Kumpulan Europlus (80%) UEM (51%)
Other concession owners : IJM Corp (through Road Builder) - 20% EPF (49%)
Coverage area : Linking Banting (Selangor) with Changkat Jering (Perak) Bukit Kayu Hitam (northern Kedah) to Johor Bahru (South)

SOURCES: CIMB, COMPANY REPORTS

CONSTRUCTION

May 7, 2012




9

Using the RM50m-80m/km as a guide, (i) Suke could cost RM1.6bn-2.5bn, (ii)
Dash could cost RM1bn-1.6bn, and (iii) Kidex may cost RM2.5bn-4bn. Press
reports have indicated that Kidex is worth RM2.2bn, implying a cost/km of
RM44m.
Figure 12: Estimated cost for new highways
Length Cost/ km Estimated cost
(km) (RM m) (RM m) @RM50m/km @RM80m/km
Suke 31.8 50 80 1,590 2,544
Dash 20.1 50 80 1,005 1,608
Kidex 50.0 50 80 2,500 4,000

SOURCES: CIMB, COMPANY REPORTS

3.2 MRT/HSR lines require more steel than highways
Earlier estimates put the total value of all three lines of the KVMRT at
RM40bn-50bn. However, it appears that the figure could be higher. Given that
the 51km MRT SBK line is likely to cost around RM20bn, MRT 2 & 3 could be
valued at almost RM40bn. Our calculation is based on the 150km total length of
the KVMRT as proposed earlier and the implied RM392m/km average cost for
the MRT SBK line. Excluding the 51km MRT SBK line that is already being
implemented, the remaining distance for the two lines is 99km, of which 31km
is likely to be the total distance for the tunnelling works.
Note that based on the RM8.3bn undergrounds works awarded to the
MMC-Gamuda JV, cost/km works out to RM874m, which is more than double
the average cost/km of RM392m for the SBK line. For the HSR, the latest
reported cost estimate of RM30bn is more than double the RM12bn estimated
by SPAD earlier and nearly double the RM16.5bn price tag under the ETP.
Figure 13: Our cost estimate for MRT 2 & 3
Total distance Total cost Cost/km
MRT SBK line 51km RM20bn RM392.2
MRT 2 & 3 99km RM39bn RM392.2
Total cost for KVMRT 150km RM59bn
150km total length for KVMRT based on earlier proposal
Total tunnelling length for all three lines is 40km based on earlier proposal
Balance tunnelling portion for MRT 2 & 3 works out to be 31km
Balance elevated portion of MRT 2 & 3 works out to be 69km

SOURCES: CIMB, COMPANY REPORTS

Figure 14: Details of the RM8.3bn MRT SBK underground works
Project value (RM m) : 8,300
Distance (km) : 9.5
Cost/km (RM m) : 874
No. of underground stations : 7
Contractor : Gamuda-MMC JV
JV share : 50:50
Target completion : 2016
Gamuda's share of works : 4,100
Guided pretax margins : 10-15%

SOURCES: CIMB, COMPANY REPORTS

4. INDICATION OF TIMING
4.1 Momentum of job award has been strong in 1H12
The highlights for the construction sector YTD are the approval of the RM7.1bn
WCE, and the award of 1) the project development partner (PDP) role to the
MMC-Gamuda JV, 2) the RM974m package v5 (elevated guideway/viaduct) to
IJM Corp, 3) RM764m package v6 (elevated guideway/viaduct) to AZRB and 4)
the RM8.3bn underground works (tunnelling and stations) to the
CONSTRUCTION

May 7, 2012




10

MMC-Gamuda JV. Total rail-related jobs awarded YTD amount to RM10.7bn or
81% of the total awards of RM13.2bn.

Figure 15: Project awards YTD
Date Contractor Project RM m
16-Jan-12 Mitrajaya Two/three story terrace house and shop office in Putrajaya 33.4
17-Jan-12 Kimlun Corp Two blocks of service apartments and ancillary buildings in Putrajaya 82.1
2-Feb-12 IJM Corp MRT SBK line package v5 (elevated guideways/viaducts) 974.0
2-Feb-12 AZRB MRT SBK line package v6 (elevated guideways/viaducts) 764.0
7-Feb-12 WCT New HQ for Ministry of International Trade & Industry (MITI) 301.0
7-Feb-12 Kimlun Corp Supply of segmental box girders (SBG) for MRT SBK line 223.2
13-Feb-12 Hock Seng Lee Road construction job in Sarawak 82.2
20-Feb-12 Mitrajaya Subcontract works for extension of Kelana Jaya LRT 46.8
20-Feb-12 Mitrajaya Subcontract works for extension of Ampang LRT 55.2
20-Feb-12 Mitrajaya 560 units of medium cost apartments, 8 units of shop houses in Putrajaya 79.4
21-Feb-12 Eversendai Structural steel for steam turbine hall for Janamanjung plant extension 25.0
21-Feb-12 Eversendai Manjung 4 project ducts - Janamanjung plant extension 7.0
22-Feb-12 WCT Kota Kinabalu Medical Centre 331.0
23-Feb-12 Mudajaya 1,000MW extension of Tanjung Bin coal-fired power plant 1,006.0
23-Feb-12 Eversendai Mechanical equipments & structure erection works for Tanjung Bin plant extension 367.0
12-Mar-12 Kimlun Corp Apartment and ancillary buildings in Johor 68.3
14-Mar-12 TRC Synergy Renovation of Komplex Dayabumi 36.0
20-Mar-12 Fajarbaru Builder Demolish and reconstruct Shaw Parade 72.9
20-Mar-12 Gamuda-MMC JV MRT SBK line underground works (9.5km tunnel and 7 stations) 8,300.0
3-May-12 Fajarbaru Builder Depot and traction power substation for Ampang LRT extension 299.8
Total 13,154.3

SOURCES: CIMB, COMPANY REPORTS

4.2 Expect good newsflow in 2H12 and beyond
Highlights for the construction sector from 2H12 include feasibility studies as
well as the tender process and award of rail and highway jobs. The award of the
remaining packages of the MRT SBK line will remain a priority as the tender
process started at the beginning of this year.
Awards in 2H12 should also focus on the station works for the elevated and
underground works, and depot works. According to recent press reports, the
MMC-Gamuda JV will subcontract RM3bn-4bn worth of underground station
works. All in all, we expect the total value of job awards in 2H12 to be double the
value in 1H12. Contract awards in 2012 could total RM20bn-25bn compared to
RM8.7bn in 2010 and RM8.1bn last year.
Figure 16: Value of local job awards
Title:
Source:
Please fill in the values above to have them entered in your report
8,650
8,100
13,154
25,000
0
5,000
10,000
15,000
20,000
25,000
30,000
2010 2011 1H12 2012E
RM m

SOURCES: CIMB, COMPANY REPORTS

CONSTRUCTION

May 7, 2012




11

4.3 Remaining packages of SBK line to be awarded earlier
The MMC-Gamuda JV, the project development partner (PDP) for MRT SBK
line plans to speed up the award of the majority of contracts from the Oct 12
deadline to early 3Q12. This means that about 80% of projects could be awarded
for the civil, station and depot works months ahead of schedule. The PDP
initially indicated that 85% of projects would be dished out by Oct 12.
So far, 27 out of the 86 elevated packages have been awarded, bringing the total
contract value to RM10.4bn. In the short term, at least three more packages (v1,
v4 and v7) of the SBK line, each worth an estimated RM800m-1bn, will be
awarded.

Figure 17: Tender and award schedule for MRT SBK line elevated portion

SOURCES: MRT CORP.

Figure 18: Tender and award schedule for MRT SBK line underground & station works

SOURCES: MRT CORP.

CONSTRUCTION

May 7, 2012




12

Figure 19: Prequalifiers for MRT SBK line’s non-tunnelling portion (listed & non listed)
Elevated civil
works Open category (5 packages) Bumiputera category (3 packages)
(8 packages) 1. Sunway Construction Sdn Bhd 1. Naim Engineering Sdn Bhd
2. Mudajaya Corporation 2. Trans Resources Corporation Sdn Bhd
3. Trans Resources Corporation Sdn Bhd 3. TSR Bina Sdn Bhd
4. Muhibbah Engineering Sdn Bhd 4. Ahmad Zaki Sdn Bhd
5. IJM Construction Sdn Bhd 5. HRA Teguh Sdn Bhd
6. Ahmad Zaki Sn Bhd 6. MTD Construction Sdn Bhd
7. MRCB Engineering Sdn Bhd 7. Syarikat Muhibbah Perniagaan & Pembinaan Sdn Bhd
8. Gadang Engineering Sdn Bhd 8. Zecon Sdn Bhd
9. Loh & Loh Construction Sdn Bhd 9. Cergas Murni Sdn Bhd
10. Konsortium Putra Perdana Const & 10. Tidal Marine Engineering Sdn Bhd
Worth Builder JV
Station (8 packages)Open category (5 packages) Bumiputera category (3 packages)
1. Trans Resources Corporation Sdn Bhd 1. Trans Resources Corporation Sdn Bhd
2. Sunway Construction Sdn Bhd 1. Naim Engineering Sdn Bhd
3. Naim Engineering Sdn Bhd 3. TSR Bina Sdn Bhd
4. Fajarbaru Builders Sdn Bhd 4. Ahmad Zaki Sdn Bhd
5. IJM Construction Sdn Bhd 5. HRA Teguh Sdn Bhd
6. Loh & Loh Construction Sdn Bhd 6. Kembang Serantau Sdn Bhd
7. Muhibbah Engineering Sdn Bhd 7. Apex Communication Sdn Bhd
8. Gadang Engineering Sdn Bhd 6. Pembinaan Bukit Timah Sdn Bhd
9. Pembinaan Mitrajaya Sdn Bhd 9. Perkasa Sutera Sdn Bhd
10. WCT Bhd 10. Dekon Sdn Bhd
11. Kencana Torsco Sdn Bhd - Al Ambia JV 11. Syarikat Muhibbah Perniagaan & Pembinaan Sdn Bhd
12. Konsortium PPC - WB JV (Putra Perdana Const.
& Worthy Builders Sdn Bhd
Depots (2 packages) Open category (1 package) Bumiputera category (1 package)
1. Sunway Construction Sdn Bhd 1. Trans Resources Corporation Sdn Bhd
2. Trans Resources Corporation Sdn Bhd 2. Naim Engineering Sdn Bhd

SOURCES: CIMB, COMPANY REPORTS

4.4 Funding for MRT SBK line is in place
It was recently reported that Maybank Investment Bank, CIMB Investment
Bank, RHB Investment Bank and AmInvestment Bank have been appointed to
manage the sale of Islamic (Sukuk) bonds to partly finance the construction of
MRT SBK Line. Dana Infra, a subsidiary of the Ministry of Finance (MOF), will
launch the bonds as early as end-May 12. The first tranche will raise RM8bn,
and the initial issuance of Sukuk bonds could be as much as RM2bn. Dana Infra
may issue an additional RM30bn via a 50-year programme, which will be
announced later.

5. RISKS
5.1 Political risks
Highway projects in Malaysia follow a built-operate-transfer (BOT) model
involving the participation of the private sector. The private sector will either
undertake the construction on its own or tender out the packages to various
contractors. The contract also comes with a concession agreement (CA) for a
fixed period, usually 33-50 years. The CA will stipulate the toll rates and the
quantum of toll hikes for every three or five years.
The challenge for concessionaires is to address potential issues, usually brought
about by opposition parties, on the absolute cost of the highway and concession
period. Case in point is the RM7.1bn WCE’s CA that will run up to 60 years,
which is the longest in history. Political risk also applies to larger-scale jobs like
the MRT and the HSR which are estimated to cost RM40bn-50bn each.
5.2 Uncertainty of tolling and risks to CA terms
Uncertainty of tolling is another risk for concessionaires. Case in point is the
Eastern Dispersal Link (EDL) in Johor. The highway was completed in early
2012 and was opened to public in 1 Apr 12 with one month of free tolling. There
appears to be issues with the location of the toll booth, i.e. at the Customs and
Immigration Complex (CIQ) into Singapore. Those who oppose the highway
CONSTRUCTION

May 7, 2012




13

claimed that because of the location of the toll booths, vehicles that pass the CIQ
from Singapore will have to pay toll even if they exit into Johor Bahru town and
not use the entire stretch of the EDL.
This is bad news for MRCB, the concessionaire, as this could mean that the
no-tolling period could be extended, with no visibility on potential
compensation from the government. The compensation should at least cover the
RM7m/month of interest charges starting in Apr 12. The group indicated
recently that it is willing allow the government to acquire the highway at the
right price.

6. VALUATION AND RECOMMENDATION
6.1 RM95bn worth of rail and highway jobs
Overall, we estimate that RM95bn worth of highway and rail jobs could come
onstream from this year onwards and buoy construction activities. The rollout
of job awards will focus on the MRT SBK line over the next few months.
Contractors under our coverage are looking at RM1bn-4bn worth of new
contracts by end-2012. Their current outstanding order books of RM2bn-6bn
should last for at least two years.
Figure 20: Rail and highway jobs
Title:
Source:
Please fill in the values above to have them entered in your report
1,000
1,600
2,200
7,100
20,000
30,000
40,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Dash Suke Kidex WCE MRT SBK Line HSR MRT 2 & 3
*Values for Dash, Suke, Kidex and MRT 2 & 3 are based on CIMB's estimates
RM m

SOURCES: CIMB, COMPANY REPORTS

Figure 21: Outstanding order book and potential replenishments
Title:
Source:
Please fill in the values above to have them entered in your report
5,800
3,500
2,200
2,500
4,000
2,840
3,100
1,000
4,000
1,000
1,000
1,500
1,000
1,500
0
1,500
3,000
4,500
6,000
7,500
9,000
Gamuda IJM Corp MRCB Muhibbah Mudajaya Sunway WCT
Outstanding order book YTD (RM m) Potential replenishment by end 2012 (RM m)

SOURCES: CIMB, COMPANY REPORTS

CONSTRUCTION

May 7, 2012




14

6.2 Potential winners
Potential winners of the remaining packages of the elevated portion of the MRT
SBK line are the 28 prequalifiers, 13 of which are listed contractors. Among the
13, we gather that TRC Synergy (TRC MK, Not rated), Mudajaya, Sunway,
Fajarbaru (FBC MK, Not rated), Gadang (GADG MK, Not rated), WCT and Loh
& Loh stand a good chance of bagging the viaduct and station packages. Key
winners of the WCE remain IJM Corp and KEuro (KEUR MK, Not rated). We
continue to believe that the MMC-Gamuda JV has a good chance of emerging as
the main winner of MRT 2 & 3. While there are still no additional details on the
three new highways (Suke, Dash & Kidex), recent press reports on Kidex
indicated that Bina Puri (BIN MK, Not rated) and Mudajaya are among the
likely winners.
Another potential rail related job which is outside of Klang Valley is the RM8bn
Gemas-JB double tracking project. This is the last double tracking works for
peninsula Malaysia. Based on our previous checks, the local contractors that
could bag the project are Gamuda, IJM Corp and WCT. All three are in
consortiums with Chinese contractors. We understand that time line for the
award of the contract is after general elections.
Figure 22: Major transport infra (rail & highway jobs)
Projects Potential winners
MRT SBK line : 13 listed contractors - see chart
MRT 2 (circle line) & MRT 3 : MMC-Gamuda has a good chance
West Coast Expressway (WCE) : IJM Corp, KEuro, WCT, Mudajaya
Suke - highway : Various/unknown
Dash - highway : Various/unknown
Kidex - highway : Mudajaya, Binapuri
High Speed Rail (KL-S'pore) : YTL Corp (the original proposer)
Gemas-JB double tracking : Gamuda, WCT, IJM Corp

SOURCES: CIMB, COMPANY REPORTS

Figure 23: Exposure for 13 listed contractors for MRT SBK line elevated packages
Listed contractors Elevated civil works Station works Depots
Open Bumiputera Open Bumiputera Open Bumiputera
Ahmad Zaki Yes Yes No Yes No Yes
Fajarbaru Builders No No Yes No Yes No
Gadang Yes No Yes No Yes No
IJM Corp Yes No Yes No Yes No
MRCB Yes No No No No No
Mudajaya Yes No No No No No
Muhibbah Engineering Yes No Yes No Yes No
Naim Holdings No Yes Yes Yes Yes Yes
Sunway Yes No Yes No Yes No
Trans Resources Corp Yes Yes Yes Yes Yes Yes
TSR Capital No Yes No Yes No Yes
WCT No No Yes No No No
Zecon No Yes No No No No

SOURCES: CIMB, COMPANY REPORTS

6.3 Maintain Trading Buy on sector
Our conclusion is that there is much in store for the sector beyond KVMRT.
Over the next 5-10 years, construction activities will be driven by transport
infrastructure works, on top of power plant and building works. The local
construction scene remains buoyant with a slew of rail and highway projects
that will be awarded in the medium term and new ones that could onstream if
they pass the feasibility tests and if political factors are favourable. Job awards
will continue to be led by MRT SBK line packages. We expect newsflow to be
good in 2H12. This continues to anchor our Trading Buy stance on the sector,
which is not an Overweight because of political risk (review and potential delay
of mega projects) if the general election outcome is unfavourable. While
Gamuda and IJM Corp are still our top picks, we highlight Mudajaya as the next
potential big winner for highway jobs.
CONSTRUCTION

May 7, 2012




15


Figure 24: Summary of stock recommendations
Companies Ticker Rec. Closing price TP Target price Upside RNAV Trading
(RM) (RM) basis (%) /share discount to
RNAV
Gamuda GAM MK Trading Buy 3.61 4.45 10% RNAV discount 23% 4.95 -27%
IJM Corp IJM MK Trading Buy 5.58 6.55 10% RNAV discount 17% 7.27 -23%
MRCB MRC MK Trading Buy 1.74 2.40 20% RNAV discount 38% 3.00 -42%
Muhibbah MUHI MK Trading Buy 1.27 1.60 40% RNAV discount 26% 2.67 -52%
Mudajaya MDJ MK Trading Buy 2.80 3.45 40% RNAV discount 23% 5.74 -51%
Sunway SWB MK Neutral 2.31 2.65 30% RNAV discount 15% 3.79 -39%
WCT WCT MK Trading Buy 2.46 3.00 30% RNAV discount 22% 4.28 -43%
Average 23% -40%

SOURCES: CIMB, COMPANY REPORTS
CONSTRUCTION

May 7, 2012




16


DISCLAIMER
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where
such distribution, publication, availability or use would be contrary to law or regulation.
By accepting this report, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound
by the limitations contained herein (including the “Restrictions on Distributions” set out below). Any failure to comply with these limitations may constitute a violation of law. This
publication is being supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored or reproduced in any form
by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB.
CIMB, its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this
research report or any securities related thereto and may from time to time add to or dispose of, or may be materially interested in, any such securities. Further, CIMB, its affiliates and
its related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting
commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment
banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report. The
views expressed in this report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or
will be directly or indirectly related to the inclusion of specific recommendations(s) or view(s) in this report. CIMB prohibits the analyst(s) who prepared this research report from receiving
any compensation, incentive or bonus based on specific investment banking transactions or for providing a specific recommendation for, or view of, a particular company. However, the
analyst(s) may receive compensation that is based on his/their coverage of company(ies) in the performance of his/their duties or the performance of his/their recommendations and the
research personnel involved in the preparation of this report may also participate in the solicitation of the businesses as described above. In reviewing this research report, an investor
should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality,
available on request.
The term “CIMB” shall denote where applicable the relevant entity distributing the report in that particular jurisdiction where mentioned specifically below shall be a CIMB Group Sdn
Bhd’s affiliates, subsidiaries and related companies.
(i) As of May 3, 2012, CIMB has a proprietary position in the securities (which may include but not limited to shares, warrants, call warrants and/or any other derivatives) in the following
company or companies covered or recommended in this report:
(a) Gamuda, IJM Corp Bhd, Malaysian Resources Corp, Mudajaya Group, Sunway Bhd, WCT Bhd
(ii) As of May 7, 2012, the analyst(s) who prepared this report, has / have an interest in the securities (which may include but not limited to shares, warrants, call warrants and/or any
other derivatives) in the following company or companies covered or recommended in this report:
(a) -
The information contained in this research report is prepared from data believed to be correct and reliable at the time of issue of this report. This report does not purport to contain all the
information that a prospective investor may require. CIMB or any of its affiliates does not make any guarantee, representation or warranty, express or implied, as to the adequacy,
accuracy, completeness, reliability or fairness of any such information and opinion contained in this report and accordingly, neither CIMB nor any of its affiliates nor its related persons
shall be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance
thereon or usage thereof.
This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CIMB and its affiliates’ clients generally and does not have
regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information and opinions in this report are
not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof.
Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial
situation and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction
in respect of the securities of company(ies) covered in this research report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of
investors.
Australia: Despite anything in this report to the contrary, this research is provided in Australia by CIMB Research Pte. Ltd. (“CIMBR”) and CIMBR notifies each recipient and each
recipient acknowledges that CIMBR is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cwlth) in respect of financial
services provided to the recipient. CIMBR is regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. This research is only
available in Australia to persons who are “wholesale clients” (within the meaning of the Corporations Act 2001 (Cwlth)) and is supplied solely for the use of such wholesale clients and
shall not be distributed or passed on to any other person. This research has been prepared without taking into account the objectives, financial situation or needs of the individual
recipient.
France: Only qualified investors within the meaning of French law shall have access to this report. This report shall not be considered as an offer to subscribe to, or used in connection
with, any offer for subscription or sale or marketing or direct or indirect distribution of financial instruments and it is not intended as a solicitation for the purchase of any financial
instrument.
Hong Kong: This report is issued and distributed in Hong Kong by CIMB Securities (HK) Limited (“CHK”) which is licensed in Hong Kong by the Securities and Futures Commission for
Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) activities. Any investors wishing to purchase or otherwise deal in the securities
covered in this report should contact the Head of Sales at CIMB Securities (HK) Limited. The views and opinions in this research report are our own as of the date hereof and are subject
to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient
therein are unaffected. CHK has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CHK. This publication is being supplied to you strictly on the basis that it will remain confidential. No
part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person
in whole or in part, for any purpose without the prior written consent of CHK. Unless permitted to do so by the securities laws of Hong Kong, no person may issue or have in its
possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the securities covered in this report, which is directed at,
or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong).
Indonesia: This report is issued and distributed by PT CIMB Securities Indonesia (“CIMBI”). The views and opinions in this research report are our own as of the date hereof and are
subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such
recipient therein are unaffected. CIMBI has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. No
part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person
in whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens
wherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations.
Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (“CIMB”). The views and opinions in this research report are our own as of the date hereof and are
subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such
recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No
part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person
in whole or in part, for any purpose without the prior written consent of CIMB.
New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their
CONSTRUCTION

May 7, 2012




17

business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978.
Singapore: This report is issued and distributed by CIMB Research Pte Ltd (“CIMBR”). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arising
from, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets
Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to
update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor,
CIMBR accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you
strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed
or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR.
As of May 3, 2012, CIMB Research Pte Ltd does not have a proprietary position in the recommended securities in this report.
Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell
to any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden.
Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered with
the Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through
a public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval
of the Financial Supervisory Commission of the Republic of China.
Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date
hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations
owed to such recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No
part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person
in whole or in part, for any purpose without the prior written consent of CIMBS.
Corporate Governance Report:
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and
Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed
to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on
inside information.
The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. CIMBS does
not confirm nor certify the accuracy of such survey result.
Score Range 90 – 100 80 – 89 70 – 79 Below 70 or No Survey Result
Description Excellent Very Good Good N/A
United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in
the United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or
governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided
to any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the
sale of investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates.
United Kingdom: This report is being distributed by CIMB Securities (UK) Limited only to, and is directed at selected persons on the basis that those persons are (a) persons falling
within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the “Order”) who have professional experience in investments of this type or (b) high
net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order, (all such persons together being referred to as “relevant
persons”). A high net worth entity includes a body corporate which has (or is a member of a group which has) a called-up share capital or net assets of not less than (a) if it has (or is a
subsidiary of an undertaking which has) more than 20 members, £500,000, (b) otherwise, £5 million, the trustee of a high value trust or an unincorporated association or partnership with
assets of no less than £5 million. Directors, officers and employees of such entities are also included provided their responsibilities regarding those entities involve engaging in
investment activity. Persons who do not have professional experience relating to investments should not rely on this document.
United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB
Research Pte Ltd solely to persons who qualify as "Major U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is
only for Institutional Investors and investment professionals whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities
and who have professional experience in such investments. Any person who is not an Institutional Investor must not rely on this communication. However, the delivery of this research
report to any person in the United States of America shall not be deemed a recommendation to effect any transactions in the securities discussed herein or an endorsement of any
opinion expressed herein. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc.
Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated
investors as defined in the laws and regulations of such jurisdictions.


Recommendation Framework #1 *
Stock Sector
OUTPERFORM: The stock's total return is expected to exceed a relevant
benchmark's total return by 5% or more over the next 12 months.
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is
expected to outperform the relevant primary market index over the next 12 months.
NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant
benchmark's total return.
NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected
to perform in line with the relevant primary market index over the next 12 months.
UNDERPERFORM: The stock's total return is expected to be below a relevant
benchmark's total return by 5% or more over the next 12 months.
UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is
expected to underperform the relevant primary market index over the next 12 months.
TRADING BUY: The stock's total return is expected to exceed a relevant
benchmark's total return by 5% or more over the next 3 months.
TRADING BUY: The industry, as defined by the analyst's coverage universe, is
expected to outperform the relevant primary market index over the next 3 months.
TRADING SELL: The stock's total return is expected to be below a relevant
benchmark's total return by 5% or more over the next 3 months.
TRADING SELL: The industry, as defined by the analyst's coverage universe, is
expected to underperform the relevant primary market index over the next 3 months.
* This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected
returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.
CIMB Research Pte Ltd (Co. Reg. No. 198701620M)

CONSTRUCTION

May 7, 2012




18



Recommendation Framework #2 **
Stock Sector
OUTPERFORM: Expected positive total returns of 15% or more over the next 12
months.
OVERWEIGHT: The industry, as defined by the analyst's coverage universe, has a
high number of stocks that are expected to have total returns of +15% or better over
the next 12 months.
NEUTRAL: Expected total returns of between -15% and +15% over the next 12
months.
NEUTRAL: The industry, as defined by the analyst's coverage universe, has either (i)
an equal number of stocks that are expected to have total returns of +15% (or better)
or -15% (or worse), or (ii) stocks that are predominantly expected to have total returns
that will range from +15% to -15%; both over the next 12 months.
UNDERPERFORM: Expected negative total returns of 15% or more over the next 12
months.
UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, has a
high number of stocks that are expected to have total returns of -15% or worse over
the next 12 months.
TRADING BUY: Expected positive total returns of 15% or more over the next 3
months.
TRADING BUY: The industry, as defined by the analyst's coverage universe, has a
high number of stocks that are expected to have total returns of +15% or better over
the next 3 months.
TRADING SELL: Expected negative total returns of 15% or more over the next 3
months.
TRADING SELL: The industry, as defined by the analyst's coverage universe, has a
high number of stocks that are expected to have total returns of -15% or worse over
the next 3 months.
** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily
outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons.


Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2011.
ADVANC - Excellent, AMATA - Very Good, AOT - Excellent, AP - Very Good, BANPU - Excellent , BAY - Excellent , BBL - Excellent, BCP - Excellent, BEC - Very Good, BECL -
Very Good, BGH - not available, BH - Very Good, BIGC - Very Good, BTS - Very Good, CCET - Good, CK - Very Good, CPALL - Very Good, CPF - Very Good, CPN - Excellent,
DELTA - Very Good, DTAC - Very Good, GLOBAL - not available, GLOW - Very Good, HANA - Very Good, HEMRAJ - Excellent, HMPRO - Very Good, ITD - Good, IVL - Very
Good, KBANK - Excellent, KTB - Excellent, LH - Very Good, LPN - Excellent, MAJOR - Very Good, MCOT - Excellent, MINT - Very Good, PS - Excellent, PSL - Excellent, PTT -
Excellent, PTTGC - not available, PTTEP - Excellent, QH - Excellent, RATCH - Excellent, ROBINS - Excellent, SCB - Excellent, SCC - Excellent, SCCC - Very Good, SIRI - Very
Good, SPALI - Very Good, STA - Very Good, STEC - Very Good, TCAP - Very Good, THAI - Very Good, TISCO - Excellent, TMB - Excellent, TOP - Excellent, TRUE - Very Good,
TUF - Very Good: