Chor: Fiscal policies may be tightened

By Sharen Kaur

sharen@nstp.com.my

Published in NST on August 29, 2012

PETALING JAYA: THE government may further tighten fiscal policies to curb excessive property speculation and to ensure house ownership remains within the reach of genuine buyers.

Housing and Local Government Minister Datuk Seri Chor Chee Heung said his ministry will recommend a review of fiscal policies to ensure that prices do not artificially go up because of speculative activities.

Among measures previously introduced were a higher real property gains tax and a lower loan-to-value ratio for third property buyers.

"We are not asking for an increase to the real property gains tax, but rather how we can ensure prices do not artificially go up because of speculation.

"Bank Negara Malaysia should think of other innovative ideas to ensure the sustainability of this sector," Chor said in his keynote address at the 15th National Housing and Property Summit 2012, hosted by the Asian Strategy and Leadership Institute (Asli) here yesterday.

"The government has to mitigate excessive investment and speculative activities in the property market to prevent a property bubble and to ensure that household debts grow at a healthy rate."

On the soaring of property prices over the last few years, Chor said apart from speculative activities, this was also because of the high cost of land and building materials and a higher demand for new housing.

"House prices are increasing across the spectrum. It is a phenomenon worldwide. Nevertheless, if compared to neighbouring countries, our properties are still affordable.

"The majority of Malaysians feel that property prices have increased sharply. We can't blame foreigners for this as they make up less than two per cent of total transactions, compared with about 20 per cent in Singapore."

Based on statistics, the average price for houses in Malaysia had increased by 54.5 per cent between 2000 and last year. The average price of terrace houses in Kuala Lumpur was RM527,133 and RM325,951 in Selangor.

Chor said to ensure sustainable housing development, the state government, property developers and government-linked companies must keep abreast of real demand and the affordability of the locals, especially in the Klang Valley.

"There should be more focus on affordable houses. The role of housing developers should go beyond mere business."

Meanwhile, Asli chairman and Sunway Group founder Tan Sri Jeffrey Cheah urged the government not to take measures that were too drastic to curb real estate speculation as it would slow supply.

"With the tabling of the 2013 Budget coming up, we hope there will be more positive measures. We do not expect any property bubble as our properties are still affordable compared with our neighbours."

Property industry likely to consolidate via M&As, says IOI

By Sharen Kaur

sharen@nstp.com.my

Published in NST on August 29, 2012

IOI says there will be a major shift to commercial development and more retirement and nursing homes and performing arts theatres will come on stream.

PETALING JAYA: IOI Group's chief says the property development landscape in Malaysia will undergo massive changes and there is a high possibility of the industry consolidating through mergers and acquisitions (M&A).

IOI Group executive director Datuk Lee Yeow Chor says there will be a major shift to commercial development and more retirement and nursing homes, private community centres, and performing arts theatres will come on stream.

"Property development will become more and more a property redevelopment business with a lot of old buildings being replaced with new towers. There will be a lot more old buildings undergoing refurbishment.

"We have seen army camps being converted to housing projects and schools turning to malls like The Pavilion," he said yesterday at the 15th National Housing and Property Summit 2012.

Lee said the embassies and high commissions in Kuala Lumpur are also expected to be demolished to make way for new developments, creating more vibrancy in the market place.

One such case is the British High Commission, which will be demolished to make room for a new urban development.

"Overseas, we have seen the Wharf around River Thames in London being converted into an integrated development. Now there is the SP Setia-Sime Darby consortium planning to redevelop the Battersea Power Station in London.

"IOI is also converting an army camp in Singapore into an integrated development known as the South Beach Centre. I believe this will be the way forward for developers worldwide," Lee said.

Meanwhile, on the consolidation of the property sector here, Lee expects some developers to fade away and be replaced with smaller players who will have big ideas through M&A.

The M&A trend started in 2009 with the merger of Pelangi Sdn Bhd, Petaling Garden Sdn Bhd and Island & Peninsular Sdn Bhd to create I&P Group.

In 2010, UEM Land Bhd acquired Sunrise Bhd, creating the biggest property group in Malaysia with a market capitalisation of over RM9 billion.

EPF's investment creates fresh competition

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 29, 2012

THE entry of the Employees Provident Fund (EPF) as a big investor in real estate will create more challenges for the sector, said Country Heights Holdings Bhd founder Tan Sri Lee Kim Yew.

"With the recent land acquisition in Sungai Buloh, the EPF is going to be one of the biggest developers here. There is also competition from boutique developers and government agencies that have embarked on property development," Lee said.

The EPF's wholly-owned unit, Kwasa Land Sdn Bhd, has acquired 932ha of Rubber Research Institute (RRI) land in Sungai Buloh from the Malaysian Rubber Board for RM2.3 billion.

Lee said other challenges faced by the industry included inconsistent government policies by both federal and state governments.

He also said the building of low-cost houses is creating a slump in the market place and does not fulfil the requirement of a quality lifestyle.

Since the 1980s, developers are required to build low-cost houses priced RM42,000 a unit and below. But rising cost of raw materials is causing them to lose money from each house built and the take up by the lower income group has been slow.

The issue has been raised numerous times by the Real Estate And Housing Developers' Association (Rehda), which comprises more than 1,000 members, for several years now.

"Developers are also at the mercy of bankers. I don't think the property market can be sustained like this, unless the government does something soon. Local developers are capable of building healthy properties to avoid a property bubble here," Lee said yesterday at the 15th National Housing and Property Summit 2012.

Rehda president Datuk Seri Michael Yam added that there should be a shift from low-cost hou-sing to affordable homes.

He said there is a lot of demand for properties priced between RM150,000 and RM300,000 and Rehda is appealing to the government to study the current market demand and situation.

Rehda is urging the government to freeze imposition of policies, guidelines and laws that add to the cost of development.

"We also hope the government will free up more land that they own for development. The government should consider developing Malay reserve land and building properties over existing infrastructure," Yam said.

Glomac Bhd group managing director and chief executive officer Datuk Fateh Iskandar Mohamed feels that the property market will face new challenges going forward.

"Banks are still overzealous in end financing. The cost of doing business has also shown an increase in compliance cost, which is now about 30 per cent of total construction expenditure, not related to enhancement of property," he said.

Mah Sing may land up to RM150m deals in Klang Valley

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 9, 2012

KUALA LUMPUR: Mah Sing Group Bhd, the sixth largest property stock by market capitalisation, is expected to ink one or two deals to buy land in the Klang Valley for between RM100 million and RM150 million in the next quarter, sources said.

The group is targeting to acquire land with gross development value (GDV) of RM5 billion this year. It has acquired land in Rawang, Kota Kinabalu and Bandar Baru Bangi for a combined RM452.3 million, which is 73 per cent of its GDV target.

The land cost translates into about 12 percent of the RM3.65 billion GDV that it has achieved.

Mah Sing would need another RM1.4 billion in GDV to achieve its full-year target. Assuming the land cost is also about 12 per cent of the GDV, it equates to about RM150 million.

Group managing director and group chief executive Tan Sri Leong Hoy Kum told Business Times it is buying a large piece of land in the Klang Valley to build mixed landed properties. He declined to elaborate on the proposed development a nd land cost.

He said Mah Sing was eyeing more land in Greater Kuala Lumpur, Pena ng, Johor, Sabah, Perak, Malacca and Kedah and is especially interested in developing the Rubber Research Institute of Malaysia land in Sungai Buloh.

AmResearch views Mah Sing as the emerging proxy to the Malaysian property sector.

Mah Sing has 39 residential, commercial and industrial projects, with remaining GDV and unbilled sales of RM18.2 billion. Its undeveloped landbank of 613ha has an estimated GDV of RM15.6 billion.

According to its 2011 annual report, its cash and bank balances stand at a healthy RM665 million. Its borrowings are at RM705.5 million plus redeemable convertible secured bonds of RM268.3 million

AmResearch estimates Mah Sing's earnings to increase from RM169 million in fiscal 2011 to RM209 million in the current financial year.

It also forecasts earnings to improve to RM260 million in 2013, and RM320 million in the following year.

The estimations are in line with Mah Sing's earnings growth target of 20 to 25 per cent a year.

AmResearch also expects Mah Sing's property sales to rise to RM3.5 billion next year and RM4 billion in 2014, from the targeted RM2.5 billion this year.

The research house has recommended the company's stock a "buy" with a fair value of RM3.60 per share (current price as at report date - RM2.42).

Based on its market cap, AmResearch views that Mah Sing is undervalued from both the earnings (forward price earnings is six to 10 times and earnings per share compound annual growth rate is 24 per cent) and assets standpoint (50 per cent discount to their net asset value of RM4.80).

Mah Sing shares closed unchanged at RM2.41 yesterday.

Prasarana cooperating in Halcrow probe

By Sharen Kaur

sharen@nstp.com.my

Published in NST on August 9, 2012

KUALA LUMPUR: SYARIKAT Prasarana Negara Bhd said it will give its full cooperation to the Malaysian Anti-Corruption Commission (MACC) regarding investigations on British engineering firm, Halcrow.

Halcrow was appointed as an independent evaluator by Prasarana to assess the capabilities of the eight groups which had bid for the systems contract for the Ampang light rail transit (LRT) line extension project.

The British group is under investigation by MACC on the integrity of its evaluation process in assessing the capabilities of the bidders to undertake the job.

This includes the George Kent (M) Bhd-Lion Pacific Sdn Bhd joint venture.

The report card of the bidders has been politicised by PKR's director of strategy Rafizi Ramli.

On July 3, Rafizi disclosed details of the Halcrow technical report which was critical of George Kent. He questioned the award of the systems contract to the company.

Meanwhile, the police have started separate investigations and are probing how the documents were leaked under the Official Secrets Act.

Prasarana officials have been interviewed on this matter.

Prasarana issued a statement saying that the leaked detailsof the Halcrow report did not give the public a full picture of the entire tender and award process.

It said dated selective excerpts were superseded by new information resulting from the clarifications.

Halcrow is also being investigated on the potential conflict of interest with UK's Balfour Beatty Inc, which owns 70 per cent of Balfour Beatty Rail (BBRail) Sdn Bhd.

BBRail is one of the eight bidders. Its consortium partners are UK's Invensys Inc and Ingress Bhd.

Based on reports, Halcrow had prior working relationship with Balfour Beatty.

Both companies were part of a consortium that won a STG35 million (RM169 million) project in Wales. They also jointly bid for a project in the Jebel Ali Free Trade Zone.

"It is improper for us to make public comments at this stage as the matter is still under investigation by MACC," Prasaranasaid in an email reply to Business Times.

Prasarana also said that the investigations would not effect the award on other pending projects by the company.

"We can confirm that all except one particular work package have already been awarded under the LRT extension project. The contract for access card had yet to be tendered out," the company said.

Eversendai's success inspires BlueScope

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 7, 2012

SHAH ALAM: BLUESCOPE Engineering Systems Sdn Bhd (BESSB), a unit of Australia-listed BlueScope Steel Ltd, aims to earn a reputation like Eversendai Corp Bhd through its Ranbuild product offering.

"We want to be like Eversendai but on a smaller scale. That is why we are investing now and constructing buildings to the span of 100 feet," BESSB general manager Leong Wai Yuan said.

Eversendai, an integrated structural steel turnkey contractor, earned its reputation for having been involved in the world's tallest buildings, starting with the Petronas Twin Towers, and then, United Arab Emirate's Burj Dubai.

"It is a blessing we belong to BlueScope Steel. The group has earned its right in the market and that gives us an opportunity to move forward," Leong told Business Times in an interview recently.

BlueScope Steel is the largest steel group in Australia and Asia. It is the market leader in Australia, in terms of the Ranbuild product offering.

Ranbuild is a durable galvanized-steel pre-engineered building solution, that is similar to the Ikea-model of do-it-yourself.

BlueScope Steel is not new to Malaysia, having forayed here over 40 years ago with its unique product offerings.

Its 60 per cent unit, BlueScope Lysaght Malaysia, set up in 1968, was the first to introduce long length, cut-to-order roofing products, in what was then a market dominated by asbestos sheeting and cheap zinc-coated corrugated sheet.

The Australian group also has a 60 per cent interest in BlueScope Steel (Malaysia) Sdn Bhd, a flat steel products maker, with Permodalan Nasional Bhd holding the rest of the stake.

Muhibbah Engineering to diversify

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 4, 2012

KUALA LUMPUR: MUHIBBAH Engineering (M) Bhd is looking at privatisation projects in the healthcare and education sectors to reduce its dependency on construction jobs, its business development director, Mac Chung Jin said.

"Being in the construction business, there is always the risk of not being paid on time. We have to work first before we get paid. We are looking to diversify into other sectors that can offer us great potential to grow and boost our earnings," Mac told Business Times.

"The Health Ministry has said there is a shortage of healthcare centres here so we are seeing what we can do to get into it. We are aiming for privatisation projects to have our own facilities," he added.

Mac said Muhibbah Engineering had not officially discussed with the Ministry on this but it will be starting to open its doors soon.

In the education sector, Mac said Muhibbah Engineering is looking to set up private and international schools, colleges and universities.

"There is a big need for education institutions here. Our plans are still in early stages. Once we start, it will move fast. What I like about the healthcare and education industries is that, if you can establish it in Malaysia, you can go overseas.

"Our plan is to focus on the Asean market in the near medium term, after establishing our footing here," Mac said.

Muhibbah Engineering, which has some RM3 billion worth of jobs in hand, is involved in infrastructure works like marine and port construction, airport and airline support facilities, as well as building dams, bridges, roads and railway.

It also makes cranes and holds a road and airport concession in Malaysia and Cambodia, respectively.

Currently, 55 per cent to 60 per cent of its earnings are derived from the construction sector, 25 per cent from crane manufacturing, and the rest from shipbuilding and concession.

Mac said within the next three to five years, the group expects more than 50 per cent of its earnings to come from recurring income contracts, by way of its ventures in healthcare and education.

For the fiscal year 2011, Muhibbah Engineering registered a pre-tax profit of RM114.9 million on revenue of RM1.95 billion.

Union not convinced private parties can turn around KTMB

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 10, 2012

KUALA LUMPUR: Railwaymen Union of Malaya (RUM) is still not convinced that any private party, including MMC Corp Bhd, can turn around Keretapi Tanah Melayu Bhd (KTMB), its president Abdul Razak Md Hassan said.

Business Times had reported that MMC plans to pump in as much as RM1 billion to take control of KTMB's operations, including freight and passenger services.

Abdul Razak said, RUM, comprising 3,600 members, is concerned that the takeover would be another failure by private parties to turn the ailing firm into a profitable entity.

He cited Marak Unggul Sdn Bhd's management takeover (an interim arrangement prior to full privatisation of KTMB, which was eventually abandoned), of the railway operator in 1997, as proof that private companies were incapable of managing the company efficiently.


Renong Bhd owned 50 per cent of Marak Unggul, while DRB-HICOM Bhd had 25 per cent, Bolton Bhd 20 per cent and Jasa Meta Sdn Bhd five per cent.

KTMB was corporatised on August 1 1992 under the Railways Act 1991, and placed under the management of Marak Unggul on August 1 1997.

Marak Unggul's plan to privatise KTMB was rejected by the government in 2001.

Industry observers cited Renong's debts as the reason. Also, Marak Unggul did not inject the RM100 million it said it would into KTMB when it took over.

KTMB has been bleeding red ink since it was corporatised in 1992 due to high operating costs.

It did make a net profit of between RM9 million and RM15 million from 1993 to 1995, before falling into the red again in the following years, until now.

As at 2008, the operator had recorded RM1.45 billion in accumulative net losses.

MMC plans to submit its privatisation proposal for KTMB to the government after Hari Raya. The proposal includes pragmatic financial and business model for KTMB to help it move forward.

RUM believes KTMB can turn around without the help of private parties.

KTMB's new president Datuk Elias Kadir has crafted a three-year turnaround plan, which includes details like cost-cutting, improving efficiency, train delivery time and diversifying its revenue stream.

PHB shelves proposals for Bangsar land

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 8, 2012

KUALA LUMPUR: Pelaburan Hartanah Bhd (PHB) has shelved all proposals from several companies to develop a prime 8.09ha site on Jalan Bangsar in Kuala Lumpur, its chief said.

PHB, a unit of Yayasan Amanah Hartanah Bumiputera owns the land where the Unilever headquarters and factory once sat.

It has received proposals from companies like Mah Sing Group Bhd, Malaysian Resources Corp Bhd (MRCB), SP Setia Bhd, UEM Land Holdings Bhd and Land & General Bhd.

Business Times reported recently that MRCB had emerged as the front-runner to secure the land development job, which is estimated to generate more than RM5 billion in gross development value.
However, PHB managing director and chief executive officer Datuk Kamalul Arifin Othman said it is not in discussion with any parties currently.

“We are just waiting for approval from the City Hall for the masterplan that we submitted to them early this year.

“Once the masterplan has been approved, we will decide on what to do next,” Kamalul told Business Times via a telephone interview recently.

PHB may award the contract to develop the land to one party or parcel it out to several property developers.

It may also take a stake in the project through a joint venture,
Kamalul said.

“This is a huge project that requires proper master planning.

We want it to be the next mega development for Kuala Lumpur,” he said.

Current developments in Kuala Lumpur include the MRCB’s KL Sentral integrated transport hub in Brickfields, SP Setia’s KL Eco City and Setia Federal Hill and the RM26 billion Tun Razak Exchange.

Set up by the government in 2006, PHB is to facilitate Bumiputera ownership in prime commercial real estate.

PHB also has a trust fund that invests in commercial properties.

Meanwhile, Mah Sing – one of the interested developers – said it is waiting for a final decision from PHB on the status of its proposal and the land development plan.

“PHB has not come back to us. So we believe we still have a chance to bank the job.

“We think the contract would be awarded after the elections,” its managing director and group chief executive Tan Sri Leong Hoy Kum told Business Times.

3-year plan to put KTMB back on track

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 6, 2012

A three-year turnaround plan is in the offing for the ailing national railway company Keretapi Tanah Melayu Bhd (KTMB).
 KTMB's new president, Datuk Elias Kadir has drafted a business plan to help turn around the company, which includes cost-cutting and improvements in efficiency and train delivery.

Railwaymen Union of Malaya (RUM) president Abdul Razak Md Hassan said Elias recently shared his business plan with the union's key people as well as KTMB board.

"This is the first time in KTMB's history, RUM was brought in to discuss the business plan. Elias believes together we can turn around KTMB. The company has been sleeping too long," Razak said.

RUM is a union comprising 3,600 members who are KTMB employees. Razak said one of the main agendas in the plan is to reduce the operational cost within the first two years of Elias' presidency.

KTMB has been incurring losses of about RM130 million to RM180 million a year.

Razak told Business Times that Elias aims to cut the losses in phases by reducing wastage.

The plan also entails improving efficiency, work production and on-time delivery of trains.

Since Elias took over from Dr Aminuddin Adnan in May this year, the on-time delivery of KTM commuter trains has improved from 17 per cent to 86 per cent, Razak said.

This was possible with the cooperation of the key officials and non-executive staff of KTMB under Elias' management, helped by the new China six-car set trains.

On a recent Business Times report which said KTMB was in choppy waters after losing its talent pool and key personnel since Elias came on board, Razak said those who resigned had organisational culture issues.

In the first three months in office, Elias implemented a policy requiring all staff including the management to be punctual at work and improve their delivery time.

"They were not receptive to the new work culture and changes Elias was making to improve KTMB. They have been 'honeymooning' too long under the previous management and now feel pressured to perform," Razak said.

Speaking on behalf of RUM, Razak said Elias is a good leader who has made progress in KTMB just under 100 days in office.
 

"There has been progress in KTMB," Razak said.

Major MRCB-Nusa deal in the works?

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 2, 2012

POTENTIAL MERGER: A merchant bank shortlisted to help arrange share swap between two companies A MERCHANT bank has been shortlisted to help arrange a share swap deal between Malaysian Resources Corp Bhd (MRCB) and Nusa Gapurna Development Sdn Bhd.

It is learnt that MRCB is studying the proposal by Nusa Gapurna to buy into the company in exchange for a 20 per cent stake in the property and infrastructure group.

This is not the first business deal between the two parties.

Nusa Gapurna previously sold its 60 per cent interest in Lot 348 Sentral to MRCB.
Lot 348 Sentral is part of MRCB's KL Sentral transport hub in Brickfields here.

HwangDBS Research has said the potential merger would appear synergistic, given Nusa Gapurna's attractive land bank and common shareholder in the Employees Provident Fund (EPF).

EPF has a 42.2 per cent interest in MRCB and 40 per cent in Nusa Gapurna.

The rest of Nusa Gapurna is owned by Gapurna Sdn Bhd, controlled by Datuk Mohd Salim Fateh Din and his associates.

Nusa Gapurna's prime asset is the 16ha land behind PJ Hilton in Petaling Jaya, where the construction of PJ Sentral Garden City will start next year.

The project developer is PJ Sentral Development Sdn Bhd, a 70:30 joint venture between Nusa Gapurna and Selangor Development Corp (PKNS).

PKNS previously owned four hectares at the PJ Sentral project site.

It sold 3.44ha to Nusa Gapurna in 2006, and retained less than a hectare for its new headquarters.

Nusa Gapurna, in an email reply to Business Times, said the deal is still in proposal stage and is non-conclusive.

It also said that all parties concerned in the project had been assigned confidentiality.

Sources close to MRCB said it is interested in Nusa Gapurna because of the PJ Sentral project.

"If the deal goes through, it would be good for MRCB. PJ Sentral will be the next biggest thing for MRCB after KL Sentral," a source said.

"MRCB's prime land bank is running low and KL Sentral is at the maturity stage. The land swapping is timely as the group seeks to expand," he added.

PJ Sentral will comprise nine blocks of office towers and residences, a hotel, and an office and retail podium.

The project is estimated to fetch more than RM5 billion in GDV over 15 years.

KTMB's revival on shaky tracks?

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 2, 2012

Keretapi Tanah Melayu Bhd (KTMB) is in choppy waters after losing its talent pool and key personnels who had management issues with the new president Datuk Elias Kadir, a former KTMB employee told Business Times.

It is learnt that more than a dozen key KTMB officials and technical specialists had resigned in the last two months, the source said, adding that the majority had joined Syarikat Prasarana Negara Bhd, Mass Rapid Transit Corp Sdn Bhd (MRT Corp) and MMC Corp Bhd.

Elias had been on the KTMB board for two years before being appointed as head of KTMB's cargo division earlier this year.

He took over from Dr Aminuddin Adnan as president of KTMB effective May 2, and tasked with turning around the ailing company.

The source alleged that Elias had not been cooperating with the staff regarding the operations of KTMB.

"We were not seeing eye to eye. We have been with KTMB for more than 10 years and know what is best for the company. Elias has been managing KTMB in his own ways, which are not favourable to the staff.

"We can expect more to leave soon as they are not happy with Elias. He has failed in his task as the president of KTMB and in keeping the company's key talents," the source said.

The source said 160 members of The Railwaymen's Union of Malaya (RUM) recently protested against Elias and RUM president Abdul Razak Md Hassan for aligning with former.

Abdul Razak and Elias were not available for comment.

Meanwhile, the source said the 38 six-car-set (SCS) trains from China had helped KTMB to operate better and provide timely services, with 15 minutes interval, for the commuters.

The SCS trains were made by Zhuzhou Electric Locomotive Co at a cost of RM1.9 billion and delivered to the government last year.

The acquisition is part of the National Key Result Area programme to improve the quality of urban transport services.

The source said Elias' claims that the SCS trains were not up to standard were baseless.

"One of the SCS trains stopped recently because it was not properly maintained. This is because several suppliers have stopped dealing with KTMB as they were not paid.

"As such, KTMB has not been able to carry out proper maintenance on its rolling stocks and infrastructure, which has caused several mishaps and accidents.

"Failure by the drivers in operating the state-of-the-art features installed in the driver cabin has also contributed to the non-performance of the train," the source added.

George Kent bags Ampang LRT job

By Sharen Kaur
sharen@nstp.com.my
Published in NST on August 1, 2012

George Kent Bhd, a company specialising in mechanical and engineering work, has won a contract for the Ampang light rail transit (LRT) extension line project.

The contract awarded by Syarikat Prasarana Negara Bhd is for engineering, procurement, construction, testing and commissioning of system works for the Ampang LRT line.

This confirms a Business Times report last month which stated that a George Kent-led joint venture is tipped to win the job, reportedly worth about RM960 million.

George Kent's joint-venture partner for the contract is privately owned Lion Pacific Sdn Bhd, which holds a PKK (Pusat Khidmat Kontractor) and CIDB licence for track work.

Established in 1936, George Kent, which prides itself as a leader in mechanical and electrical engineering, posted a pre-tax profit of RM26.2 million on revenue of RM152.3 million for fiscal 2011.

The stock closed three sen higher yesterday at RM1.03.
Prasarana is the project and asset owner for the LRT line extension project.

According to Prasarana, the George Kent-Lion Pacific joint venture will be supported by local and international technical partners with proven track records in their respective fields of systems implementation expertise.

Business Times understands that they may include French group Thales, China Railway Construction Corp and Tewet GmbH, a project management consultant company.

Prasarana said some of the key sub-systems proposed by the joint venture and their partners have synergy with Prasarana's current operations.

"In the long run, Prasarana will benefit from reduced operating expenditures and cross-competency gains that will increase service efficiencies," it said in a statement yesterday.

Prasarana said with the award of the latest contract, it has awarded most of the packages under the Ampang LRT line extension.

The remaining contracts to be awarded are for access card system, which has yet to be tendered out.

Prasarana also maintained that the construction cost for the entire LRT extension project is below the original budgeted cost of RM7 billion.