Busy 2017 for Gamuda with RM28bil MRT2 and township projects
13 Dec 2016 | The Star Online

SHAH ALAM: Gamuda Bhd is set to have a busy 2017 as it outlines two major projects with staggering figures, namely the RM28bil Mass Rapid Transit Line 2 (MRT2) project and four townships with an estimated gross development value of RM45bil.

In a rare question-and-answer session with the media last week following the group’s AGM, group managing director Datuk Lin Yun Ling gamely responded to a slew of questions on the conglomerate’s business direction.

“Two thirds of the MRT2 contracts have already been awarded. The remaining works are for the MRT stations and they will be awarded over the next eight to nine months. Any costs associated with land acquisitions will be within the budget,” he says.

Known for being a reputable and reliable operator in multi-billion ringgit infrastructure projects, Gamuda’s name is usually the first to crop up when it comes to high-profile government projects.

Its current construction order book amounts to some RM9bil and is enough to sustain the group for the next three years.

To cope with new jobs, Gamuda has set aside RM2.7bil in capital expenditure for next year for the purchase of plant, machinery and tunnel boring machines (TBMs) for its construction business.

According to Lin, eight TBMs are currently being refurbished in Ipoh in preparation for upcoming MRT2 works. Another four TBMs have been purchased as the tunneling works would require a total of 12 TBMs.

Gamuda is the contractor for the underground work package for MRT2. It is also tendering for new tunnelling jobs in Singapore.

Meanwhile, Lin confirmed that Gamuda will try to bid on a piece of the proposed East Coast Rail Link (ECRL) and KL-Singapore High Speed Rail (HSR) projects once more details are provided.

“The main contractor for ECRL is from China and we might talk to them to be a subcontractor. Note that it is still early. Even their office is still not up yet,” he said.

“There are many jobs we can participate in 2017 like the ECRL and HSR. We are quite good at doing such projects given our experience, so we will try to bid for them,” he added.

The group is also involved in the massive RM27bil Penang Transport Master Plan (TMP) project.

When asked whether the expected costs for the mega project has ballooned to as much as RM40bil as reported by other media previously, Lin said he was unaware of this.

“The RM40bil figure is new to me. As far as we know, it shouldn’t vary too much from the earlier figure. We are currently finalising all the impact assessments, and in the middle of this month there will be a public dialogue on the TMP,” he said.

Aside from its main construction business, Lin is enthusiastic about the prospects of the group’s growing property segment. To emphasise this point, he said the group would stick to its property sales target of RM3bil for its current financial year ended July 31, 2017 (FY17).

“Maybe we will not need to revise the figure downwards like what other firms have done. We are currently on track,” he said.

Its property unit, Gamuda Land Sdn Bhd, currently has RM1.9bil worth of unbilled sales in FY17. It achieved RM2.1bil in sales for FY16, exceeding initial target of RM1.3bil.

The group currently enjoys half of its sales from overseas projects, which partly insulates it from the subdued Malaysian property market as well as a declining ringgit.

Counting on the strength of its 3,800-acre land bank, Gamuda Land is rolling out four major township projects with an total estimated GDV of RM45bil to be developed over the next 20 years.

Lin explained that adopting a long-term viewpoint, especially when it comes to land acquisition, is important despite the prevailing weak sentiment in the property market presently.

“Land acquisition is a long-term strategy. For example, we paid RM4bil for the land for the four townships. But that investment will generate revenue and business activity of more than RM40bil for the next few decades. Quite often it is good to invest when the market is weak,” he pointed out.

Meanwhile, from a financial standpoint, Lim acknowledged the challenges posed by the ringgit’s decline but brushed off concerns that it could negatively impact the group.

“At the moment the main impact (from the falling ringgit) is in our import of plant machinery as quite a bit come from overseas. But those are capital investments to be used over the next 20 years, so it is not going to have a major impact,” he said.

On the other hand, his main concern is on the possibility of weaker consumer sentiment which could dampen the investment appetite in the property market.

“Consumer or aggregate demand may still remain weak. If that happens, the affordability of properties will not be so good,” he noted.