GAMUDA AND SIME PROPERTY – BENEFICIARIES OF ECRL REROUTING
The negotiation on ECRL (East Coast Rail Link) Project is ongoing now between Malaysia and China. Announcement on the outcome of the negotiation will be announced within this week or next week. It is highly expected that the project will be revived with reduced scope and China agreeing to some terms and conditions. It will be a win-win situation for both the countries.
Our Finance Minister, Mr. Lim Guan Eng has hinted two days ago, 6/4/2019 that ECRL will be rerouted to the southern part of Kuala Lumpur and it is going through part of Negeri Sembilan. Below is the map of the new routing of ECRL. Two companies will be greatly benefitted from this change. There are Gamuda and Sime Property.
The following are the development land along the New ECRL Rail Routes
Sime 1 – Carey Island (Sime Property has 11,000ha land. The 3rd Klang Port with development value of
RM200bil will be built. Theme park, golf course, township and a seafront city are also proposed)
Sime 2 – Serenia City (1,775 acres development that includes Xiamen University and KLIO (Kuala Lumpur
International Outlet). The launched phases of landed properties are selling very well.)
Sime 3 – Nilai Impian (1,809 acres matured township. Future launches will be on commercial and high
end residential units)
Sime 4 – Labu (Malaysia Vision Valley with aviation hub. It will house a high speed rail station. Land size
at 8,793 acres)
Gamuda – Gamuda Cove (1,530 acres township project that feature tram system within the township.)
Sime Property will have 4 pieces of huge land, namely Carey Island, Serenia City, Nilai Impian and Labu situated along the rail route. These projects will be greatly benefitted once ECRL is completed in a few years time. Knowing the construction speed of Chinese contractor, ECRL will be completed faster if the project were to be awarded to local contractors.
Gamuda has a project situated along the new route. Gamuda Cove is a new intelligent city with tram system under development now. The city will have a soon to be opened Discovery Park and future theme park.
Conclusion :
The share price of Gamuda has moved from the lowest for the last 3 months at RM2.62 to RM3.25 on 8/4/19. On the other hand, Sime Property has moved rangebound between RM1.00 to RM1.19 for the last 3 months. It was closed at RM1.13 on 8/4/19. Comparing the two, Gamuda has moved quite a bit with further upside, whereas Sime Property is a laggard. I strongly recommend a “BUY” on both Sime Property and Gamuda that they will trade upwards in short and medium terms with the revival of the ECRL project.
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